E Minister David Cameron said he would not allow RBS to pay out £500m in bonuses – which the bank never intended to do.
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.