This article is more than 11 years old

This article is more than 11 years old

Lloyds Banking Group has sounded out shareholders about a change in its executive remuneration plans that could generate pay rises for its directors despite being bailed out by the taxpayer.

The bank, in which the government holds a 44% stake, is understood to have approached big City investors between a month and six weeks ago with outline proposals for a modified pay package for the executive team of the bank .

The discussion about possible pay rises comes as research by the Guardian shows that 12 top bankers earned more than £1bn in performance-related pay and shares in the run-up to the credit crunch - even though their banks have subsequently racked up more than £300bn in losses, writedowns and emergency bail-outs from governments and shareholders.

Nevertheless, advisers to the recently created Lloyds Banking Group are thought to have argued to shareholders that pay rises were warranted because the new bank was considerably larger as a result of the takeover of HBOS in a deal brokered by Gordon Brown last September at the height of the banking crisis.

One shareholder said: "It was not the best time to bring forward a plan where the potential rewards looked quite big."

In the face of shareholder reticence, Lloyds withdrew the plan and has not awarded pay rises for its directors.

But a fund manager said he still expected the bank to return with a new scheme, "but a little less generous".

Shareholders advised Lloyds to put its plans in front of UK Financial Investments, the body set up by Alistair Darling, the chancellor, to look after taxpayer stakes in Lloyds and Royal Bank of Scotland.

UKFI refused to comment but would be able to influence any potential pay deals. While it does not want to dictate levels of pay to the banks, it is likely to be aiming to influence the basis upon which pay cheques are handed over.

Eric Daniels, the Lloyds chief executive, is currently paid a basic salary of £1.03m.

The bank's other five executive directors before the HBOS takeover was announced had a basic salary of between £590,000 and £680,000.

They also have short- and long-term incentive schemes that include annual bonuses of up to 200% of basic salary, with the exception of Daniels, who can boost his salary with a 225% bonus payout.