ANDY Hornby, the former boss of HBOS, has been shamed into handing back his £700,000 discretionary payments after the furore over ex-RBS chief Sir Fred Goodwin's pension.
The news that Mr Hornby is to give up his cash payments was revealed in a letter to the Treasury select committee.
It emerged as Alistair Darling, the Chancellor, signalled that despite a tougher stance on bonuses, the government did not want to
cap executive pay at nationalised banks, as it brought in so much tax. It was also essential to keeping key staff.
Lloyds has revealed that while Mr Hornby did not receive a pension at HBOS; he received a 25 per cent rise on his base pay instead. Last year, the bank decided to double this to 50 per cent, backdated to 2006, but Mr Hornby has now decided not to take it. He did not take any compensation when he left last October.
In its letter to the Treasury committee, Lloyds said: "Mr Hornby subsequently decided voluntarily to forgo any increase in cash in lieu of pension entitlement."
The move was welcomed by MPs. Lord Thurso, a Liberal Democrat member of the Treasury committee, said: "It shows he has an understanding of the sensitivities and public anger at the scale of the pay-off.
"I think it goes to the heart of the whole culture of the big plc remuneration, which is basically when somebody needs to go, you pay them off. There is a compromise agreement, but it's kept quiet. It's quite clear that there are cases where that is not in the best interests of the public.
"It should be a case of 'this is what we are giving you – take it or leave it'. If that is what he has done, then I would say he has certainly shown good judgment."
David Mundell, the shadow Scottish secretary, said: "I would hope he is giving it back because he thinks it is the right thing to do, not because he has been shamed into it."
Roger Lawson, of the UK Shareholders' Association, said it was nice to see a banker could be "contrite". He added: "Clearly, many people blame Mr Hornby's regime for the position that HBOS got itself into, when it was clearly overstretched due to an aggressive expansion policy. But I think HBOS shareholders would welcome this."
Giving evidence to the Treasury committee, Mr Darling ruled out a cap on pay at nationalised banks. "We have… got to make sure that we don't end up with a situation where other banks start attracting people who are key to making, say, RBS and the Lloyds group work in the future," he told MPs.
He did not know when the banks would be out of state hands, but he warned there was "no quick fix" and he did not want to push the banks back into the private sector prematurely.
The full article contains 491 words and appears in The Scotsman newspaper.
