RBS is losing its best staff due to the stringent pay conditions imposed upon it by the government, said chief executive Stephen Hester yesterday.
He told City A.M. that “regretted losses” – losses of the bank’s most valued staff despite efforts to keep them – are going up. “They’re too high. They need to come down,” he said.
The disclosure follows a similar revelation from Barclays chairman Marcus Agius last week. He also told City A.M. that the bank’s “regretted losses” are on the rise due to the 50p tax rate.
Hester added that morale at RBS has been battered by banker-bashing: “Working at RBS over the last couple of years has felt pretty beleaguered,” he said. Yesterday’s results showed that RBS’s compensation ratio of revenues to pay for 2010 was 34 per cent, up from 26 per cent on higher headcount. Pay at the investment bank cost £2.9bn versus £2.7bn in 2009, but average pay per head fell from £150,000 to £144,000. Bonuses are capped at £2,000.
RBS chairman Philip Hampton said: “If we are going to be in [investment banking], not to pay our people the market rate is not tenable.”
Hampton also revealed that RBS has seen some of its hedge fund clients move to Switzerland to escape the EU. “London is a less attractive place now,” he told City A.M., adding that businesses were concerned about “pay, taxation, regulation – everything!”