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INTRODUCTION 

For years, Lloyds Banking Group have operated a pay policy whereby they offer pay rises and a pay budget far below what colleagues need, let alone deserve. Any good business needs to balance costs, and wages forms part of that. What LBG aren’t telling you is that they could afford inflation-based pay rises, instead choosing to play workers off each other by robbing Peter to pay Paul and retaining as much money as possible to prop up shareholder pay outs and profits. 

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Here Unite lays out some of the key considerations to take into account when the bank likely offers a derisory pay award, and we show where they can really find the money to make a pay award that we can all be proud of, and truly shows them as using finance as a force for good.

BEST PROFITS SINCE 2009!

  • The bank made £6.9 billion in profit before tax – highest profits since the banking crisis 

  • In the 2021 annual report Lloyds Banking Group recorded £10 billion in retained profits. Increased by £6 billion (2020)

  • Profit per employee before tax in 2021 was over £105,000. 4.5 times higher than 2020 and the highest since 2009!

  • You can see there is more than enough money to cover the maximum cost of the pay budget

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SPARE COMMON EQUITY TIER 1 CAPITAL (CET1) 

  • The CET1 ratio measures a bank’s solvency through the strength of the capital (e.g. shareholder equity, reserves) that it holds. LBG has a regulatory minimum ratio of 11%, and it’s internal target is 13.5%

  • By the end of 2021 the CET1 ratio was 17.3%. That meant there was 3.8% of capital surplus available. With the bank paying out £3.4billion to shareholders this helped reduce the CET1 to 14.7% by the middle of 2022!

  • This still (at present) leaves 1.2% in excess of what the bank feel is needed to be retained for growth and investment. This is estimated to be £2.5BILLION of spare money and more than enough to give staff an  inflation busting pay rise! 

  • There will still be a ridiculous amount spare for the inevitable share buybacks we predict will happen in 2023

  • REAL TERMS PAY HAS BEEN IN DECLINE SINCE 2018

  • TOTAL PAY IN 2021 AROUND 14% LOWER THAN ITS PEAK IN 2018

  • INFLATION (RPI) IS OVER 12% AS OF AUGUST 2022

  • A PAY RISE BELOW INFLATION EQUATES TO A PAY CUT

SAVINGS ON STAFF REDUCTIONS

  • In the 2021 annual report it shows LBG reduced their average headcount by 3589

  • We estimate this equates to a potential saving of £214 million

  • That is a nice amount to contribute back into improving remaining staff pay!

COST SAVINGS FROM REDUCTION IN OFFICE FOOTPRINT

  • Lloyds will be seeking to reduce their office footprint by 11% before 2023. No doubt in part due to the mass increase in homeworking, with staff taking on the energy and heating costs that come with it, but with no financial contribution from the bank

  • This reduction will bring savings, some of which should go towards staff

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FREE UP MONEY BY ADDRESSING THE DISPARITY IN GPS

  • Currently Group Performance Share works on the principle the higher the grade, the higher the bonus. This has come under criticism particularly from A to C staff as generally they won’t earn more than 5%. 5% of a little salary is still very little, whereas you can have a grade G colleague earning upto 50% of a massive salary. Then there are Executives that can earn 100% and CEO earning up to 140%

  • It is believed every grade should be able to attain a percentage within the same range. Since it is based on salary, this will still result in higher awards for higher grades but will increase opportunity, balance and equality for the lower grades by increasing their GPS potential

  • Restructuring the GPS pool could then free up more money to be dedicated towards salary increases!

INCREASED REVENUE FROM BANK OF ENGLAND RATE INCREASES

  • In 2022 rates have increased 5 times from 0.5% to 1.75% (with some expecting them to go as high as 4% in 2023)

  • This means the bank will likely continue to see a surge in profitability, a windfall unrelated to their business activities

  • Lloyds in the half-year results predict that a 1% rise in interest rates could increase net interest income by £675m in the first year, and then over £1bn by year 2

  • Rather than prop up profits by giving colleagues a real term pay cut surely it makes more sense to repurpose some of this ‘easy money’ and direct it to staff so they feel valued and fairly paid

Unite fully believe that the bank will say it is impossible to spend what we say is necessary and deserved for their staff.


As you can see the points raised, that just won’t wash. It is also worth reminding LBG that when they do the wrong thing it can be an expensive mistake to fix.


Lloyds Banking Group is a business that can set aside and afford to drop £22 billion on a PPI scandal, £1.2 billion on the HBOS reading scandal, £695,000,000 for the issues related to insurance branch business in Germany and £91,000,000 on the fine for historical home insurance issues last year. Then there is the £400,000,000 software write off in 2021. These issues alone total up to just over £24 billion!


This year’s pay claim sounds extravagant because frankly, staff are too used to being given way less than they are worth but there is literally billions upon billions of pounds at Lloyds Banking Group’s disposal. In
comparison, and reality, we are asking for very little. Yet, that ‘very little’ will make a huge difference to the workforce a.k.a the backbone of Lloyds Banking Group.

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