Royal Bank of Scotland to pay bonuses totalling £1.3bn

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.

Start your day with The Independent, sign up for daily news emails
New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
News
news
PROMOTED VIDEO
News
i100
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
art
News
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Arts and Entertainment
tv
Life and Style
fashion
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all