Royal Bank of Scotland to pay bonuses totalling £1.3bn
Wednesday 24 February 2010
Royal Bank of Scotland is to pay bonuses totalling £1.3 billion to its investment bankers despite expectations of grim annual results tomorrow.
The payout is thought to have been given the green light by UK Financial Investments (UKFI), the body set up to manage the Government's stakes in banks.
RBS, which is 84% taxpayer-owned after a string of bailouts, is expected to post losses of more than £5 billion for the year to December.
But it is the bank's controversial bonus pot that will prompt howls of outrage from the public as it comes despite the deficit and an expected admission that it has not met Government lending targets, which were laid out as part of the terms of its bail-out.
RBS boss Stephen Hester, who has waived his own payout for last year, has said the bank must give competitive bonuses to its key staff but that it would pay "the minimum we can get away with" to the investment bankers.
They will receive their bonuses in shares rather than cash and this could be subject to clawback at a later date. The only cash bonuses will be paid to those earning under £39,000, who will get a maximum of £2,000 in cash.
While the bank's results are likely to make grim reading, its losses for 2009 pale in comparison with the £24.1 billion shortfall for the year before - a UK corporate record.
The bank is thought to have suffered bad debts and write-offs of up to £13 billion last year as a savage recession soured loans to businesses and homeowners.
As the economic shocks tore through other areas, investment banking is likely to be one of the few highlights in the results.
Mr Hester is engaged in a five-year turnaround plan for the beleaguered lender, aiming to return it to a healthy state so that the Government can recoup the £45.5 billion it has pumped in to prop it up.
He hopes to return it to profit in 2011, but has warned that recovery will be painful and said the after-shocks from the recession "will take years to subside".
Mr Hester's role has also been to break up parts of the business that have attracted the attention of Europe's Competition Commissioner in the wake of the huge levels of state support.
The bank will have to sell 318 branches of the former Williams & Glyn's business in England and Wales and its NatWest branches in Scotland.
Its insurance business - including brands such as Churchill and Direct Line - is also on the block, as well as its global merchant services and its majority stake in the Sempra commodity trading business.
Under the terms of the Government bail-outs RBS and fellow part-nationalised bank Lloyds Banking Group agreed to lend £39 billion to homeowners and businesses in the year to February as part of efforts to boost credit in the economy.
Both banks have argued that the appetite for loans has evaporated in the slump, but MPs have called for the Treasury to ratchet up the pressure to make the banks meet their pledges.
- 1 Planes go hybrid-electric in important step to greener flight
- 4 Hip hop is both racial and political, and for Iggy Azalea to suggest otherwise is insulting
- 5 Man hospitalised with pneumonia after downing eggnog at office Christmas party
Antonio Martin shooting: Black teenager may have tried to ambush patrolman, says police officer's lawyer
Orphan kangaroos spend Christmas without their parents
Northern Lights above Britain: Stunning Aurora Borealis illuminates Northumberland sky on Christmas Eve
New route to Mars could make manned mission much cheaper and easier
Isis 'did not shoot down Jordan war plane' before capturing pilot, says US
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
Alex Salmond has 'broken his word to the Scottish people' says Scottish Lib Dem leader
iJobs Money & Business
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...
£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...