Royal Bank of Scotland faces 'shareholder discontent' over £607m bonuses

Payouts by the 81% state-owned bank have infuriated investors

Taxpayer-backed Royal Bank of Scotland (RBS) will face shareholder discontent today over £607 million of staff bonuses awarded during a year when it lost £5.2 billion.

Payouts by the 81% state-owned bank have infuriated investors after a "chastening" 2012 when a £390 million settlement for Libor rate-fixing, another £1.1 billion of mis-selling provisions and a £175 million IT fiasco drove losses deeper from £1.2 billion in 2011.

But the bank will argue at its annual general meeting in Edinburgh today that it is on a stronger footing and should be ready for a return to the private sector by next year.

Earlier this month, RBS swung out of the red with pre-tax profits of £826 million for the first three months - its best performance since the third quarter of 2011.

Chief executive Stephen Hester said: "The clean-up of RBS can be accomplished under our own steam in the next year, year and a half. I think we will be substantially done next year."

That could see the Treasury begin selling its stake in the bank next year, handing a pre-election boost to Chancellor George Osborne.

While its £607 million bonus pool in 2012 was down 23% on £789 million a year earlier, it included £215 million for investment bankers.

However, the bank said it was recouping £302 million for its Libor settlement by cutting the 2012 bonus pot, clawing back from previous years and reducing current year awards.

Shareholder advisory body Pirc is calling for investors to reject its pay report over excessive rewards.

It said: "The bottom line is that the bank, similarly to its major competitors, has a remuneration structure which can lead to excessive pay."

RBS is also likely to face questions over an IT meltdown last summer which locked up to 17 million customers out of their accounts.

City watchdog the Financial Conduct Authority (FCA) has started a probe into the fiasco in June and July last year, which saw payments go awry, wages appear to go missing and home purchases and holidays interrupted.

The glitch affected customers of RBS, NatWest and Ulster Bank, and prompted Mr Hester to hand back his bonus for 2012.

The bank could face a fine, censure or both for the incident which reportedly followed a botched attempt to update software on its payment processing system. It has already taken a £175 million hit to cover costs and compensation for the catastrophe.

However, the lender will also underline its progress on shrinking the bank and returning it to health.

Last year it quit the Government's £282 billion Asset Protection Scheme without making a claim on it and also floated its insurance arm, Direct Line Group.

RBS is also trying to find a buyer for more than 300 branches after a deal to sell them to Santander fell through last year.

Mr Hester has rejected suggestions the lender should be split into a "good" and "bad" bank, to separate out toxic assets.

In a recent newspaper interview, he said it would be costly and time-consuming.

RBS is majority-owned by the taxpayer after a £45 billion bailout at the peak of the financial crisis in 2008.

PA

Start your day with The Independent, sign up for daily news emails
Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Life and Style
Men with beards rejoice: Your beard probably doesn't harbour faeces-like bacteria
health
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before