BARCLAYS and RBS are expected to slash bonus payouts in the coming months after a series of scandals hit the industry.
The deepening payment protection insurance crisis has hit both banks to the tune of several billion pounds and shows no sign of ending, while Barclays was hit by a £290m Libor fine last year.
RBS’s share price tumbled six per cent yesterday on fresh talk it could face a £500m fine and criminal sanctions for interest rate fixing.
RBS also suffered a retail systems crash last year that hit millions.
The state-backed bank’s boss Stephen Hester is believed to be foregoing his right to a bonus this years in light of that crash. Last year he also turned down his bonus.
Meanwhile RBS’ investment bank bonus pot is set to come in at around £250m – down sharply on the £390m paid out a year ago and well below the £950m the year before.
Barclays is also cutting back – new chief executive Antony Jenkins could get a bonus of £1m, on top of his £1.1m salary. That would be a major cut relative to his predecessor Bob Diamond, who saw salary and bonus payouts of £4.05m in 2011 and £6.75m in 2010, and long-term incentive awards of £2.25m each year.
Jenkins spent most of last year heading up the retail and business bank and was successful enough to be appointed chief executive, while the bank’s share price has more than doubled in the last six months.
Barclays declined to comment, noting that the remuneration board has yet to decide his bonus for the year.
The chief’s own guidelines to staff explain that pay should be based on the bank’s social impact and adherence to cultural standards, as well as financial targets.
Sky News reported that the remuneration committee is sounding out investors on the potential payout, as well as looking at a total bonus pot of £1.5m to £2m.
Meanwhile RBS is planning to settle its Libor fiddling case with UK and US regulators in the coming weeks, and is expected to face an even bigger fine than Barclays.
Following in the steps of Swiss bank UBS, the bank is under pressure from US authorities to accept some criminal liability for its actions. The Wall Street Journal reported RBS is resisting the idea. RBS declined to comment.