Lloyds Bank chief gives up £2.3m bonus to stave off row over pay

Eric Daniels had been entitled to a maximum 225 per cent of his 1.04m salary because of his "significant individual contribution", but has waived a bonus for the second year in a row to stave off another row over bank pay.

Mr Daniels' move follows similar sacrifices by top bosses at Barclays last week, while Royal Bank of Scotland chief executive Stephen Hester is also expected to follow suit.

Lloyds chairman Sir Win Bischoff said: "Mr Daniels has taken this action because he believes that the excellent progress the group is making, based on the considerable contribution of many colleagues across the company, is in danger of being obscured by the current debate on executive bonus awards in the banking sector."

Lloyds saved HBOS from nationalisation at the height of the financial crisis in 2008 but was forced to take public cash to strengthen its balance sheet and is now 41 per cent owned by the taxpayer.

The bank is "mindful" of the public debate over bonuses although it highlighted its status as a retail and commercial bank – which means payouts will be far below the telephone-number figures handed out by investment banks.

Lloyds added that bonuses to other executive directors would be made in shares, fully deferred until 2012 and subject to clawback under principles agreed by the G20 nations.

Despite a "challenging" year for the bank and its customers, Lloyds said it had made good progress on integrating HBOS and fundraising to strengthen its finances.