UK government halts RBS bonus plans
26 April 2014
A clash between branches of the UK government over bonuses at Royal Bank of Scotland Group PLC has forced RBS to redraw its pay plans, The Wall Street Journal reported quoting people familiar with the matter.
According to the report, UK Financial Investments Ltd (UKFI), the body charged with running the government's 80-per cent stake in RBS, had wanted approval for plans to pay bonuses of up to twice the fixed pay for key staff, but was overruled by the UK Treasury.
Chancellor George Osborne, heading the Treasury, who had long been opposed to salary caps, met with RBS chief executive Ross McEwan on Thursday to discuss the issue, one source told the newspaper.
Under EU rules banks are required to get shareholder approval to pay bonuses up to twice the salary. Following the intervention, a rare example of a major investor blocking the proposal, The bank's request for a vote on the issue at its annual shareholder meeting in June was withdrawn by the bank.
UKFI was established following RBS's 2008 bailout as an independent group for management of the government's investment in the bank at "arms length."