Lloyds slashed its ISA rates days before boss sealed £11m pay deal
LLOYDS Bank – bailed out by the taxpayer during the financial crash – slashed its savings rates days before approving an £11.5million pay package for its chief executive.
On Tuesday, Britain’s biggest bank cut interest rates for new Isa customers at Lloyds Bank and Halifax to as little as 0.75 per cent – half the rate on offer 12 months ago.
The blow comes even though the Bank of England base rate has remained at 0.5 per cent for six years.
Every year, savers are allowed to put up to £15,240 into a tax-free account. However, the 0.75 per cent rate means those tempted to put the full amount in a Lloyds Bank Cash Isa Saver will earn only £114 interest.
Elsewhere they could earn twice as much. Providers such as National Savings & Investments and Skipton Building Society, for example, pay 1.5 per cent, or £228.
From last Tuesday new customers at Halifax get only 0.8 per cent on £1 or more on its Halifax Isa Saver Variable, meaning those who put in the full amount will earn only £122. A year ago the bank paid 1.5 per cent. Rates for new savers may be slightly higher if they tie up their money for longer periods.
Hours after the changes took effect, Lloyds rubber-stamped an £11.5million pay package for chief executive Antonio Horta Osorio on Thursday. It included more than £7million in cash and shares from bonuses and pension contributions, and was approved despite protests from customers.
Lloyds had to be bailed out with £20.5billion of taxpayers’ cash after being saddled with billions of pounds of toxic loans when it took over Halifax/Bank of Scotland in 2008.
Justin Modray, of independent advisers Candid Money said: ‘Lloyds customers will be absolutely appalled when they find out about these cuts so soon after protests about the chief executive’s pay. Many will be wondering what is the point of saving with Lloyds.’
Money Mail revealed this week how the bank is struggling to cope with plunging sales of loans, credit cards and other products after scrapping sales targets.
Isa rates have been cut because banks do not need customers’ savings to make money. Instead, they have borrowed cheaply from the Government and the money markets to lend out at profitable rates on mortgages and personal loans.
A Lloyds spokesman said: ‘We regularly review our savings range and make changes in line with the market and our competitors. These reflect the ongoing low bank base rate.’