Lloyds' record £117 million fine over the PPI mis-selling scandal has hit the bonus awards for the bank's top management, including boss Antonio Horta-Osorio.
The bank settled with the Financial Conduct Authority after the regulator found it had mishandled customer complaints related to PPI.
The lender said in a statement that it would reduce payouts due to some senior executives by a total of £2.65 million as a result of the penalty.
The statement said: "The Board has now decided to make adjustments to payments due to the Group Executive Committee and for some other senior executives in recognition of their ultimate responsibility for oversight of the PPI operations."
"This will mean awarded but unvested bonuses totalling approximately £2.65 million in aggregate will be forfeited."
A further £30 million will also be taken out of the group bonus pool, the bank said.
Chief executive Antonio Horta-Osorio said he was "very sorry" for its past misconduct, which the FCA labelled "unacceptable".
The Portuguese banker, whose 2014 pay packet totaled around £11.5 million, will lose about £350,000 as part of the changes to the bonuses.
The City watchdog said Lloyds had treated customers unfairly and denied some access to redress.
The company has launched a review of the complaints under scrutiny, of which 90% have been resolved. The remaining customers will be paid money they are owed by the end of the month.
British banks have set aside around £26 billion to cover the costs of scandal, which has become the most costly in UK banking history.
