Lloyds CEO to Waive 2011 Bonus

The chief executive of Lloyds Banking Group PLC, Antonio Horta-Osório, will waive his 2011 bonus, the bank said Friday.

His decision comes shortly after he returned from a leave of absence from the 41% government-owned bank due to exhaustion and as the U.K. financial regulator warned banks that it could veto large pay packets if they are seen to be putting the bank's broader capital strength at risk.

"I joined Lloyds Banking Group to rebuild the pride in the bank," Mr. Horta-Osório said in a statement. "As chief executive, I believe my bonus entitlement should reflect the performance of the group but also the tough financial circumstances that many people are facing."

Horta-Osório also noted that his recent leave of absence had "had an impact both inside and outside the bank including for shareholders."

Lloyds said the group will be considering its remuneration proposals in the next month and would make the appropriate disclosures in its annual report and accounts.

Horta-Osório returned to work at Lloyds on Jan. 9 following a two-month leave of absence for exhaustion, a move virtually unheard of among senior corporate executives and bankers. Lloyds had been in disarray after his unexpected leave, with shares hitting record lows due to the uncertainty created by his temporary departure.

His decision to return to work came following an interview with Lloyds' board, which separately took independent medical advice. The bank's chairman, Win Bischoff, said at the time that the board was confident that Mr. Horta-Osório was fully recovered.

Bank bonuses have become politically sensitive in the U.K. due to a lingering perception that bankers, who played a significant part in the build-up to the 2008 and 2009 financial crisis, are still being richly remunerated in contrast to the rest of the population.

U.K. financial regulator the Financial Services Authority has toughened its stance on bonuses. Last week it said it had warned Britain's largest banks it could veto bonuses if it felt they risked putting the bank's capital positions at risk.

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