RBS to pay £785 million in bonuses as salaries are frozen
23 February 2012
The Royal Bank of Scotland's chief executive and chairman may both have given up their bonuses but the state-owned bank is set to announce today plans for around £785 million in payouts for its workforce, including £400 million to its investment bankers.
Stephen Hester, chief executive, stood down nearly £1 million payout in shares while the chairman Sir Philip Hampton passed on £1.4 million.
However their gesture over bonuses being paid to people who work for a bank that called on £45 billion of public funds to keep it afloat and was expected to announce losses of as much as £2 billion, seems to have left their senior colleagues unmoved.
While the details of payments to other executives would not be clear until the bank issued its annual report later this year, John Hourican, head of global banking and markets, could be richer by £5 million, despite overseeing the redundancies of more than 3,000 staff. The process in itself could cost up to £200,000 per employee as it was aimed at some of highest-paid employees in investment banking, a large part of which is being shut down.
Another executive who could be getting a handsome payout is the bank's American finance director Bruce Van Saun, whose bonus, last year was £1.35 million as part of a total package of £2.3 million. This would exclude additional payouts through his share-based long-term incentive scheme. He too has not yet given any indication of his willingness to forgo this year's award despite effectively being No 3 in the bank's hierarchy after Sir Philip and Hester.
The overall bonus pool needed the government's clearance, given its 82-per cent stake in the bank following the bailout. According to industry experts the £400 million for investment bankers was the lowest since the bank was effectively nationalised in 2008, and less than half last year's payout to them of £950 million.
A spokesman for the bank said 10,000 of the bank's most senior employees would get no salary increase this year, including the executive team.
The Independent newspaper quoted an unnamed source close to RBS as saying: ''The bank has said for a while now that bonuses would be lower. They have been reduced because profits are down and no extra money has been accrued for bonuses in the third quarter. The performance at the investment banking division has had a really bad year, so there is a decrease in what the bonuses will be.''