He was asked in parliament by Labour MP Lindsay Roy whether it is “right and proper and in any way defensible” that the 83 per cent state-owned bank would shell out half a billion for bonus rewards.
He said: “I don’t think it is acceptable. It hasn’t yet set its figures for bonus payments… The British government is a seriously large shareholder in RBS and we will be making our views known.”
However, RBS has no plans for a £500m bonus pot. It has set aside £527m for total pay in the third quarter – including wages, benefits and pensions – for all staff at its investment bank.
It also plans to lay off thousands of investment bankers as part of a strategic review that could see the division shrink by a third.
The drastic action is necessary after the division’s cost-to-income ratio rose to a stunning 93 per cent, meaning it is spending 93 pence of every pound it earns. The cost of paying its staff accounts for nearly half of its revenues.