ANTONIO Horta-Osorio, chief executive of Bank of Scotland owner Lloyds Banking Group, insisted the institution is "very mindful" of popular opinion over mis-selling scandals such as pensions protection insurance (PPI) as he was grilled by a Parliamentary inquiry on the likelihood of a bonus payout.

Royal Bank of Scotland chief executive Stephen Hester has said he will not accept a bonus for 2012 after systems problems.

And Barclays chief executive Antony Jenkins has rejected a payment after a "difficult" year, including a £290 million fine for manipulation of the Libor rate. Lloyds has made £5 billion of provisions for PPI so far.

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Asked at the Parliamentary Commission on Banking Standards if he understood the public would find it difficult to accept the payment of a bonus, Mr Horta-Osorio said: "We are very mindful about the general environment in the UK financial services sector."

It has been reported Mr Horta-Osorio, who joined Lloyds in 2011 just before the banking industry lost a legal case on PPI, is in line to receive an annual bonus for last year of around £1.5m, about two-thirds of the maximum payout.

He asked not to be considered for a bonus for 2011 after taking an exhaustion-related leave of absence.

Mr Horta-Osorio said he supported a time-limit for PPI claims, which he said would benefit banks and customers.

Lloyds chairman Sir Win Bischoff denied claims from Lord McFall of Alcluith that the claims system is in "chaos".

Mr Horta-Osorio positioned Lloyds at odds from the British Bankers' Association trade body by saying Lloyds supports the "electrification" of the proposed ring-fence between banks' high street activities and investment arms.

The Government confirmed yesterday regulators will have the power to split banks up if they seek to circumvent the ring-fence.

Mr Horta-Osorio said Lloyds has made a £90m provision for interest rate swap mis-selling but said this could increase.