David Prosser: RBS fuels the flames with more cuts
Wednesday 26 August 2009
Outlook This paper warned yesterday that Britain's biggest banks would make further cuts to the pension schemes they offer rank and file staff, and within hours Royal Bank of Scotland was doing just that.
RBS executives won't be surprised by some of the hysterical headlines their plans have prompted. After all, only a few months ago, the bank was defending the massive pension hike awarded to its shamed former chief executive Sir Fred Goodwin. And most of the bank's most senior executives won't be affected by this move, since they're not members of the RBS final salary scheme, closed to new members before they joined.
It could have been worse. Unlike Barclays, RBS isn't closing its final salary plan to future accruals altogether. It will also be treating staff, in the round, more fairly. The capping of benefits on its final salary scheme means the bank should be contributing about the same amount to this fund as it pays into its defined contribution scheme. Currently members of the former get much more.
Nevertheless, RBS has some timing issues. A week ago, it announced whacking share awards to two new directors, fuelling the perception that it has one rule for fat-cat executives and another for everyone else. The bank, 70 per cent owned by the taxpayer, is still under fire for not lending enough to business or mortgage borrowers. And staff are still waiting to see where getting on for 12,000 planned job cuts will come from.
Still, at least the markets seem happier. That 70 per cent stake was acquired at an average price of 50.5p. Closing at 53.75p last night, RBS shares have now been in profitable territory for two days running – a first for the taxpayer.
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