Lloyds Bank losses soar on insurance provision LONDON (AP) - Part-nationalized Lloyds Banking Group on Friday posted a massive loss for 2011 after it set aside 3.2 billion pounds ($5 billion) to compensate customers who bought payment protection insurance. Lloyds, in which taxpayers hold a 41 percent stake, said its net loss for the year widened to 2.8 billion pounds from 320 million pounds a year earlier. The outcome was worse than expected and the company's share price was down around 3 percent in early trading in London. Income was down 17 percent to 20.8 billion pounds, but the bank said pretax profit on its core operations rose 3 percent to 6.3 billion pounds. Despite the ballooning loss, Chief Executive Antonio Horta-Osorio insisted that the group "is now in a significantly stronger position than it was 12 months ago." Over the past year, he noted that the group has disposed 53 billion pounds of noncore assets as well as raising its Tier 1 capital ratio - a key gauge of underlying financial strength - from 10.2 percent to 10.6 percent. However, he warned that the external environment remained "challenging" in 2012, "with a subdued economy, continued high levels of regulatory scrutiny and political uncertainty relating to the banking sector, and the continued potential for downside effects from financial market volatility and instability in the eurozone." Lloyds also reduced its bonus pool by 30 percent to 375 million pounds. As previously announced, Horta-Osorio is not accepting a bonus for 2011, and the bank announced earlier that it is reducing deferred share payments for 13 past and present directors and executives, including former chief executive Eric Daniels, because of the payment protection insurance issue.