(Reuters) -- British bank Lloyds is to strip five current and former senior bankers of more than 1 million pounds in bonuses over their role in the mis-selling of payment protection insurance, the Daily Telegraph reported on Monday.

The bank is taking back the bonuses over the scandal that cost the part state-owned bank 3.2 billion pounds last year, the newspaper said.

The bonus withdrawal will be the first time a British bank has exercised a "clawback" option on executive pay packages since the financial crisis, the newspaper said.

PPI was often sold alongside loans to cover repayments if borrowers fell ill or lost their jobs.

The product was labelled as worthless insurance for many customers by a British consumer group in 2008, which followed compensation claims by buyers.

In April last year, the industry lost a case in the British High Court to stop customers demanding compensation. Lloyds announced weeks after the decision its intention to set aside 3.2 billion for likely payouts.

Lloyds could not be reached for immediate comment.

(Reporting by Stephen Mangan; Editing by Neil Fullick)

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