Following media reports that seem to indicate that there is a dispute between the senior management at Lloyds Bank and its regulators at the Bank of England and the Financial Services Authority over what to do with Lloyds profits, Roger Godsiff has written to Greg Clark MP, Financial Secretary, to the Treasury to seek clarification.
He has sort assurances that the Government will not tolerate Lloyds Bank paying out dividends to its shareholders while the tax payer owns 43% of the shares and is sitting on considerable losses on the original price paid for the shares.
Mr Godsiff said: “The report suggests that the management of Lloyds want to use the profits – estimated at £800million- to pay dividends to shareholders whereas the regulators, quite rightly in my opinion, are arguing that because the tax payer had to bail out the bank in 2009 the profits should be retained within the bank and used to bolster the bank’s capital.
He commented further: “I am of course aware that Lloyds has also benefited from the Government’s provision of additional liquidity and the Quantitative Easing programme initiated by the Monetary Policy Committee.
“Bearing in mind that Lloyds Bank is 43% owned by the state who had to bail it out to prevent it collapsing it would, in my opinion, be totally improper for any temporary profits to be distributed to shareholders which will, of course, benefit senior management who have share options and get bonuses based upon enhanced share value.”
Mr Godsiff concluded: “I am also mindful of the fact that already, in the three years from 2008 to 2011 Lloyds paid out massive amounts in bonuses which vastly exceeded the £2 million that it clawed back from former executives who presided over the failure of the bank.”