Business Irish

Wednesday 20 November 2019

BoI chair Kane red-faced over bonus claw back

Former employer faces €12bn claim on missold PPIs

Lloyds Banking Group is moving to claw back some of Archie Kane's bonus
Lloyds Banking Group is moving to claw back some of Archie Kane's bonus
Archie Kane (right) with Bank of Ireland CEO Richie Boucher in background

Nick Webb

Bank of Ireland's €490,000-per-year governor Archie Kane faces excruciating embarrassment as his former employer Lloyds Banking Group moved to claw back some of his bonus as it wrestles with the fallout from the €12bn payment protection insurance mis-selling scandal.

Kane ran the UK bank's insurance division before leaving in mid-2011, in what was described as a "boardroom cull". Despite his involvement in the PPI mis-selling scandal, Kane was appointed governor or chairman of Bank of Ireland in June 2012, following the retirement of Pat Molloy.

Lloyds Bank has set aside almost €12bn to cover the cost of compensating its customers who had been wrongly sold toxic PPI products. The Lloyds bank exposure to mis-selling is the biggest of all the UK high street banks.

Lloyds has racked up repeated full-year losses, including €1.01bn last year as it sags under the costs of cleaning up the PPI scandal.

The rampant bilking of consumers was described as "the biggest financial mis-selling scandal of all time" by the influential consumer magazine Which.

Before details of the PPI mis-selling emerged, Kane had been awarded a bonus of €907,000 by Lloyds in 2010. This bonus was in the form of shares deferred for three years.

However, when the PPI scandal erupted in 2011, Kane and four of his fellow top executives at Lloyds lost 25 per cent of the bonus. Last year Lloyds had clawed back even more of the bonus, taking a further 25 per cent of the banker's windfall. Last week's further clawback now suggests that Kane has lost close to €680,000 from his €907,000 share-based bonus.

"The committee reserves the right to exercise its discretion in reducing any payment that otherwise would have been earned, if they deem it appropriate.

"In this respect, the committee has recommended to the board that it should exercise its discretion to adjust the value of certain 2010 and 2011 bonus awards, on a basis equivalent to that applied in the previous year," according to Lloyds Banking Group documents. The UK bank declined to comment when contacted by the Sunday Independent last week.

Last year Kane earned €490,000 from Bank of Ireland for his role as governor. This is made up of a fee of €394,000 plus a special 'consultancy arrangement' with Bank of Ireland (UK). He also gets €37,000 worth of allowances for utility bills, accommodation and a car.

Meanwhile, it has emerged that a loan guarantee issued by a connected person of one of Bank of Ireland's directors was called in by the bank last year. Bank of Ireland declined to comment on the disclosure made in its annual report, published last week.

Documents also reveal that Bank of Ireland top management slashed the total amount of cash they held on deposit at the bank last year – from a peak of €17.7m down to just €9.7m at the end of the financial year.

The deposits were held by 21 of the bank's key executive team, according to the latest annual report.

Bank of Ireland savings rates are among the weakest on the market, according to price comparison website Bonkers.ie. In fact Bank of Ireland's top rate for a one-year fixed account, is trumped by better deals at KBC, EBS and Permanent TSB.

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