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.”