£1 billion bonus pot good value, RBS insists
By Graham Fahy
RBS' pay and bonus policy represents good value, chief executive Stephen Hester said this morning.
The state-owned bank will set aside almost £1 billion for bonuses despite larger-than-expected losses for 2011 of £2 billion.
The losses were worsened by exceptional costs, including an £850 million provision against PPI mis-selling claims and writedowns on the value of its holding of Greek debt.
Profits generated by investment banking fell by 54% while the average pay for investment banking staff fell by just 26%, reigniting a row with union officials furious that 60,000 branch staff are offered one per cent pay rises, while 17,000 investment bankers are barely effected by falling profits.
Talks have broken down and Unite is now urging staff to reject the offer.
"How does RBS expect staff to accept its claims of poverty and this ludicrous pay offer, when there is clearly enough money flowing into the hands of its top bankers and traders?" said David Fleming of Unite.
"The bonus pot would give these low-paid employees approximately £6,000, which amounts to simply loose change for a City slicker."
But the figures were warmly welcomed by chancellor George Osborne.
"The new management team at RBS are cleaning up the mess after the biggest bank bailout in history," he said.
"We have made clear that RBS should be a backmarker in the industry when it comes to pay, so it's right that bonuses at the investment bank are less than half what they were last year and less than a third of what they were in 2009."
Chris Leslie, Labour’s shadow financial secretary to the Treasury, responded angrily to news of RBS' bonus plans and said they revealed how hollow David Cameron's promises to rein in excessive bonuses are.
"Bonuses should be exceptional payments paid for exceptional performance," he said.
"It would be completely inappropriate for the government to nod through a bonus pool of almost £800 million when the bank is making a loss, the share price has almost halved and lending targets to small businesses have not been met."
