RBS board may quit if Treasury blocks £1.5bn staff bonuses
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The directors of the Royal Bank of Scotland are threatening to quit should the Treasury block them paying an estimated £1.5bn in bonuses to staff in its investment arm.
According to reports, the directors have been advised to resign if the Treasury blocks bonus payments as it would prevent RBS board members from running the bank for the benefit of shareholders.
Chancellor Alistair Darling is ready to veto the RBS bonuses, which are believed to be 50 per cent larger than the £900m paid in bonuses last year, on behalf of taxpayers.
RBS is 70 per cent owned by the taxpayer under the asset protection scheme and has to agree the size of this year’s payouts with UK Financial Investments, which was set up to manage the public stakes in banks.
A Treasury spokesman said: “As a major shareholder, UKFI [UK Financial Investments] needs to be satisfied that RBS’s approach to remuneration is in keeping with the Financial Services Authority’s code of practice.
“I understand the point that RBS directors are expressing - they say they have to remain competitive in the market in recruiting senior executives, and this is why it’s important that all the banks are equally restrained, and RBS is not singled out.”
Yesterday Lord Myners questioned the excessive levels of pay across the banking industry, claiming that at least 5,000 people in the UK banking industry will receive in excess £1m of bonuses this year if nothing is done.
Liberal Democrats Shadow Chancellor Vince Cable says: “I would welcome their resignations, as the bank cannot hold the taxpayer to ransom.
“As a state run bank, the Government must finally take control and ensure that both its pay and lending practices are in the public interest.”
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Readers' comments (48)
john | 3 Dec 2009 9:36 am
Bonus are meant to be paid when the company makes profit , looks like employess and board in RBS see it as an extension of salary .. when the company is being supported and bailed out by tax payer , i think its the company responsiblity to pay back the money borrowed and then do what they want . its upto to them to decide if they want the job or bonus
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Nick | 3 Dec 2009 9:45 am
If I was Gordon my reply to the RBS board would be "goodbye"
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arlene | 3 Dec 2009 9:46 am
Let them quit I say. The governement should not be blackmailed by this lot. Who do they think they are? Are they devoid of all senses - what bit don't they understand about the state of the bank and the economy - sounds as if they are not fit to be in the position anyway!
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Anonymous | 3 Dec 2009 9:51 am
as RBS is still are not lending to people who need it, and are charging people excessive fees.
they could use the bonus money to put back in the system, pay back the tax payers and get thier house in order.
Let them go there is not many jobs out there for these fat cats
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ggsinclair | 3 Dec 2009 9:55 am
Let them go. Their arrogance astounds me!
How many folk have RBS made redundant over the past year? And they dare to throw a strop when their bonuses may be capped??
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Anonymous | 3 Dec 2009 9:56 am
There are some people that think they should have resigned a long time ago.
The Treasury should not give in to blackmail
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zico | 3 Dec 2009 9:57 am
Unbelievable.
Invite their resignations now and maybe the tax payer will eventually get their money back.
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John G | 3 Dec 2009 9:58 am
As an RBS customer I think that the Government should be pleased to accept the resignation of this bunch of greedy, uncaring individuals - there are many people out there with the will, skill and understanding to run this business for the benefit of it's customers.
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Julie | 3 Dec 2009 9:58 am
They are incredulous. Let them go - why on earth do they think they are worthy of these bonuses - ??
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Anonymous | 3 Dec 2009 10:00 am
Bonuses must have been stipulated in the contracts of employment. Many of the contracts may well pre-date the mess of the last 2 years. Contracts have to be honoured. The bank's board can make redundancies to cut costs but they must first honour the contracts of employment as they currently stand. I can't believe some of the rubbish peple have written in the blogs - a contract is a contract and thanks to our employment laws, failure to pay the bonuses will end up in court and the Government, Alistair Darling and the UKFA will lose and pay costs thus wasting more tax payers money.
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