Boss of loss making RBS forced to forego his £1.6 million bonus

The Royal Bank of Scotland's chief executive Stephen Hester, who had armed himself with a £1.6 million bonus despite the bank being expected to announce a whopping £6.5 billion annual loss this week, has been forced to forego his bonus following public outrage.

RBS, which had reported a record loss of £24 billion in 2008, is expected to report a second consecutive year of multibillion-pound losses of around £6.5 billion on Thursday this week when it releases its annual results.

The UK government has pumped in about £80 billion for a 70-per cent stake and an 84 per cent economic interest in RBS, to prevent its collapse.
Hester, who pockets a cool £1.2 million in annual salary, not only assigned himself a windfall bonus of £1.6 million, but was gracious enough to dole out up to £1.5 billion in bonuses to his investment banking staff.

The decision by Hester to reward himself with a bonus has sparked public outrage over the banking sector's bonus culture, which according to some commentators was the prime reason for bankers resorting to high risks that bought on the global financial crisis last year.

Although Hester, who was hired by the UK government to bring the bank to profitability, was forced to forego his 2009 bonus, RBS is still contemplating paying £1.5 billion as bonus to its 22,000 investment bankers.

In February 2009, Hester had defended plans to pay bonuses last year by saying ''bank's employees did what they were asked to last year and made profits. So when I consider how to treat them, the issue is how much worse can we treat them than other banks". He had added that payments were needed to retain staff. (See: RBS chief defends staff bonuses)