Royal Bank of Scotland slumped back into the red in the third quarter with a £1.4bn pre-tax loss, but its investment bankers will make an average of £110,000 for their first nine months' work despite falling revenues.
The proportion of what RBS pays them compared with what they bring in also soared to 34 per cent for the year to date against 25 per cent last year. For just the third quarter that figure hit 40 per cent.
It comes at a time when even American banks such as Goldman Sachs have been cutting their compensation ratios. But Stephen Hester, RBS chief executive, again defended the banks' pay policies, saying RBS had to be able to motivate key staff.
RBS losses were mainly due to accounting issues, including an £825m hit from the Government's asset protection scheme. Mr Hester said core bank operating profit came in at £1.7bn, up 10 per cent. Two-thirds of that was from retail and commercial banking, one-third from the investment bank. He said: "We continue to be at the mercy of non-cash accounting items. We are reporting our third quarter in a row of operating profits which has occurred a year earlier than we had expected."
Mr Hester said the bank was meeting targets set out in its recovery plan "and in some cases exceeding" them. Across the group, net lending fell because customers repaid loans. However he said lending to small and medium-sized businesses was up by £1.8bn excluding property. However, the number of these customers seeking loans was down 12 per cent.
RBS, which has axed thousands of jobs, said Christmas was not likely to bring more pain. "We don't have any big announcements up our sleeve. The biggest announcements are on the docket," Mr Hester said.
He warned that the economy was still bumpy: "We have our raincoat on. Clearly there are uncertainties in the global economy and the UK economy." The shares fell 2.07p to 45.07p.