Royal Bank of Scotland has been forced into a u-turn on its plan to pay executive bonuses but has warned this significantly increases risk for the business.
The bank, which is 81 per cent owned by the UK Government, had set out its plans to pay substantial bonuses to some staff in yesterday’s financial results but it has said news that UKFI, the organisation that runs the Treasury’s stake in the UK’s bailed out banks, would vote against the bonus payments at the bank’s AGM means it has had to scrap its plans.
RBS had planned to pay some staff bonuses worth up to 200 per cent of salary, and said the move was necessary to keep its bonus structure in line with its competitors.
In a stockmarket statement RBS says: “UKFI has informed the Board that it will vote against any resolution which proposes a 2:1 ratio. In these circumstances the Board expects such a resolution would fail and will therefore not be brought to the AGM. The Board acknowledges that this outcome creates a commercial and prudential risk which it must try to mitigate within the framework of a 1:1 fixed to variable compensation ratio.”