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RBS lines up $430 million bonuses

RBS-lines-up-430-GBO

The state-backed Royal Bank of Scotland (RBS) will next week hand out a $430mn bonus pot to staff as it reports its second consecutive annual profit since being bailed out by taxpayers

Sky News has learnt that RBS’s board and UK Government Investments (UKGI), which manages the public’s 62.4% stake in the bank, have agreed on the bonus pool.

The payouts will be disclosed to the City alongside the lender’s full-year  results next Friday. If confirmed, the bonus awards will mark the tenth successive year in which ‎RBS has cut the staff payouts amid political anger after its $58.45bn bailout.

Sources stated that this weekend, the senior staff in RBS’ investment bank- recently renamed NatWest Markets as part of the UK’s new ring-fencing regime- had expressed dissatisfaction with bonus awards for 2018.

Analysts have forecast a significant improvement on 2017’s operating profit of $2.8bn and attributable profit of $965mn, with RBS now saddled by fewer legacy impairment and litigation charges.

Despite the improved financial performance, the bank’s bonus pool will be marginally lower than the $439mn awarded last year for 2017, stated insiders.

RBS has been a perennial back-marker on banking sector pay since its bailout, with overall bonuses far lower than the roughly $1.6bn handed out for 2009. Executives have however complained about the difficulty of attracting and retaining key employees even as its once-sprawling investment bank has been pared back.

Under former chief executive Fred Goodwin, whose fatal ambition of turning RBS into the world’s largest bank was briefly realized, lavish bonuses and expenses become commonplace.

His successor, Stephen Hester, however, fought a long-running battle with George Osborne, to prune its investment banking operations in a more moderate way, but was ousted at the Treasury’s behest in 2013.

Since then, Ross McEwan, RBS’s current chief executive, has enjoyed a more conciliatory relationship with its largest shareholder.

Mr McEwan has continued Mr Hester’s clean-up of the bank, reaching a landmark settlement last May with the US Department of Justice to pay nearly $5bn for mis-selling mortgage-backed securities.

RBS is not expected not to have to set aside substantial new provisions for the fourth quarter of 2018, even as other UK banks have to top up compensation pots for mis-selling payment protection insurance.

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