RBS bonuses to be capped at just £1.3bn
Royal Bank of Scotland will dish out £1.3bn in bonuses this year, well below the sum it had hoped to pay.
The news comes as the bank prepares to announce a full-year loss of up to £6.5bn today – a huge turnaround from the record breaking losses of £24bn reported in 2008.
The bank is also expected to reveal it provided £80bn in new loans last year.
RBS emerged bruised after bonus negotiations with UK Financial Investment, the body charged with managing the taxpayers’ 84 per cent stake in the bank. UKFI beat down the bank’s proposal to pay out £1.6bn – a figure already far below the £2bn it would have been expected to pay if it were a fully private bank.
UKFI had the power to veto the bonus payout altogether, as RBS took part in the government’s asset protection scheme. RBS boss Stephen Hester has already agreed to waive his £1.6m bonus this year.
The bank is expected to disclose in its annual results announcement today that it will pay £225m into the public coffers as part of Alistair Darling’s one-off bonus tax.
The bonus pot will be dished out between RBS’ 22,000 eligible staff. However, it is feared the small bonus payment could lead to the onset of a brain drain that could end up costing the taxpayer dearly.
There have already been a number of high profile defections. Steve Ashley, the highly-regarded head of the bank’s rates trading division, shocked the industry when he left for Nomura earlier this month. Chris Fleming, head of European flow sales also left for the firm’s Canary Wharf base, with both believed to have been guaranteed bumper bonus payments.
RBS staff will receive bonuses in shares. The only cash bonuses will be paid to those earning under £39,000, who will get up to £2,000 in cash.