Heat is on at RBS as bonus verdict looms
ROYAL Bank of Scotland (RBS) has locked horns with the Treasury in ongoing talks over the size of its bonus pool, which is expected to hit up to £1.4bn this year despite the bank’s heavy losses and the angry populist backlash against weighty City payouts.
Chief executive Stephen Hester has repeatedly stressed the importance of striking a balance between retaining key staff and recognising the sensitivity of the bonus issue, particularly given the fact that RBS is now 84 per cent owned by the taxpayer.
But the issue is likely to be compounded by RBS posting annual losses of between £5bn and £7bn when it reveals its figures on 25 February, in spite of a strong performance by its investment banking division.
RBS’ top brass have watched keenly over past weeks as US and European rivals pave the way for its decision – notably in the case of Goldman Sachs, which said it had shown “restraint” by limiting its full-year remuneration pool to just 36 per cent of revenue, a historically low ratio, and handing its chief executive Lloyd Blankfein just $9m (£5.75m) as a bonus.
RBS is likely to allocate a lower proportion of revenues to staff compensation, and is thought to be talking to UKFI – the body which manages the taxpayer’s stake in the bank – about a ratio of closer to 30 per cent.
Hester told the Treasury Committee last month that he would pay “the minimum bonuses that our group can get away with”.