RBS to unveil £400m bonus payout
Wednesday 22 February 2012
Taxpayer-backed Royal Bank of Scotland is set to reignite the debate over bankers' pay tomorrow as it unveils a £400 million bonus pool for its investment bankers in 2011.
While the pot would represent a 60% cut on the previous year, the award will follow a year in which the bank announced thousands of job cuts as it reshaped its investment banking arm Global Banking and Markets (GBM).
RBS has been at the centre of a row over bankers' pay in recent weeks, which ultimately led to chief executive Stephen Hester waiving his £963,000 all-shares bonus.
The total payout for its investment bankers was reduced from about £500 million following discussions with the Treasury and UK Financial Investments (UKFI), which manages the taxpayer's 82% stake in RBS, Sky News said.
The bonus pot will be revealed as RBS reports a return to annual profit for the year - in the region of between £140 million to £300 million according to some analysts - compared to a £239 million loss last year.
The results will give the bank the opportunity to update on the progress it has made towards delivering a decent return to its shareholders - that is the taxpayer.
John-Paul Crutchley, analyst at UBS, said RBS has been one of the best performing European banks so far in 2012, as shares have risen nearly 40%, adding around £8 billion of market value - and therefore £6.5 billion to the taxpayers' investment.
He went on: "With the benefit of management clearly apparent, it seems surprising that the political establishment which, we think, should be aligned with a good investment outcome for RBS shareholders, is potentially putting this at risk by raising concerns over the chief executive's remuneration."
RBS has moved to strip down its investment arm GBM, which employs 18,500 worldwide, amid increased Government pressure to focus its operations on UK high street services.
The restructuring will lead to around 3,500 job losses, on top of the 2,000 announced by the bank last summer.
The proposed changes include the sale or closure of its cash equities, equity capital markets and mergers and acquisitions businesses, which had income of around £220 million in the nine months to September and are currently unprofitable.
The City will be looking for an update on how much RBS thinks the reshaping of GBM is going to cost.
Robert Law, senior banks analyst at Nomura, said: "What these measures will cost is unclear and we believe it is likely to be substantial."
Elsewhere, RBS will update on progress made with running down its bad debts - particularly in Ireland, where its Ulster bank has weighed on its performance.
RBS and its rivals have been hit by volatile financial markets, eurozone debt woes, weak consumer confidence at home and reforms to banking regulation and law, such as forcing banks to separate their retail and investment banking arms.
- 1 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 2 Students offered grants if they tweet pro-Israeli propaganda
- 3 Satellite full of sexually experimental geckos adrift in space, Russia loses control of mission
- 4 Exclusive: Cameron’s ‘Big Society’ in tatters as charity watchdog launches investigation into claims of Government funding misuse
- 5 Israel has discovered that it's no longer so easy to get away with murder in the age of social media
MH17 crash: Investigators discover more human remains and 'huge section of plane'
Susan Sarandon on David Bowie romance: 'He's worth idolising'
Students offered grants if they tweet pro-Israeli propaganda
A day in the life of Vladimir Putin: The dictator in his labyrinth
Exclusive: Cameron’s ‘Big Society’ in tatters as charity watchdog launches investigation into claims of Government funding misuse
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
John Barrowman praised for Commonwealth Games opening ceremony gay kiss
iJobs Money & Business
£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...