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RBS set to pay £500m in bonuses

Royal Bank of Scotland is set to pay its bankers an estimated £500m in bonuses this year, amid renewed concerns over banker pay and inquiries into the way the bank has treated small businesses.

The Sunday Times reports that bonuses will still be paid despite forecasted losses at RBS.

Figures from the European Banking Authority last week showed there were 2,714 bankers in Britain paid over €1m (£830,000) a year, with average pay at €1.9m.

The RBS group bonus pool was about £900m last year, according to the Sunday Times, though £300m was deducted to pay for fines relating to Libor rigging.

The bank told the newspaper: “Variable pay has been transformed at RBS and is now a fraction of what it was before the crisis.”

Last week the FCA ordered Royal Bank of Scotland to carry out a past business review following claims the bank put viable businesses into default so it could make more profit.

The FCA has also sent a letter to all other relevant banks seeking confirmation that they are satisfied they do not engage in any of the poor practices alleged in the reports.

Last week Business Secretary Vince Cable passed a report into claims RBS put viable businesses into default to financial regulators.

The claims focus on a part of RBS called the Global Restructuring Group, which was set up to help struggling companies.

But firms have said GRG imposes fines, hikes interest rates and withdraws loans. They claim RBS’ property arm West Register then buys their properties at a fraction of their value.

A separate report by former deputy Bank of England governor Sir Andrew Large has also criticised RBS and other banks for how they treat struggling small businesses.

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. It does seem perverse that a loss-making bank (or indeed any loss-making business) should be allowed to pay bonuses, other than long term share options, particularly if it’s largely owned by tax payers. Shouldn’t such practices be banned until the bank is back in the black and able to stand on its own two feet financially?

  2. Julian: Should bonuses be linked to the employer’s profitability? I got a bonus this year and I have absolutely no idea whether my employer made a profit or not. Footballers will be very upset if they’re not allowed goal bonuses unless their club is making a profit (which almost none of them do). An extreme example so please let’s not debate footballers’ pay. The point is that most people expect – and may be legally entitled to – a bonus if they hit their targets or perform in excess of their duties. If they did an exceptional job, but everyone else ballsed up to the extent that the business has made a loss, why should they be punished?

    That said, if I was in charge of the government’s shareholding in RBS I would suspend all bonuses as well until it is back in private hands. I’m not going to defend that opinion rationally, it just feels wrong to pay bankers’ bonuses with taxpayers’ money. It’s difficult to apply commercial logic to a nationalised company.

  3. This really demonstrates everything that’s wrong with this country.

    The argument from RBS will be that if they don’t pay these bonuses they can’t attract the right calibre.
    Unfortunately the system has been skewed by failure and Nationalisation. The bank should have been disbanded, it’s whole senior management sacked and prevented from working in banking for ten years. The remains of the business should have been split into those banks (whether UK or foreign) that were left standing. In order to compensate them for taking them on they should have had a tax free period of (say) 10 years.

    What is really galling is that our manufacturers and engineers get paid a pittance by comparison. What should happen is they should be paid like bankers and the bankers should be paid like engineers. We might then possibly have an economy that works.

  4. They’re PAYE. HMRC are going to take back nearly 60% of that £500m in Income tax and NI. It may stick in the craw, but the fact that the tax payer is a the major shareholder is irrelevant other other banks have lost entire teams (and the resulting revenues) due to uncompetitive pay.

  5. I think that it is a complete disgrace that £500 million should be paid out in bonuses to bankers who are already earning a fortune. Rather than paying bonuses it would be better to pay off some of their debt to the taxpayer which was around £45 billion. These bankers were around during 2008 and contributed to the whole financial mess by their cavalier approach and greed.

  6. So a bank that is 81% owned by the taxpayer is paying around 500 million pounds in bonuses to it’s top staff despite the fact that many of those individuals (in all likelihood) contributed to the bank’s demise in 2008 and despite the fact that the bank has continued to be embroiled in scandals subsequently? F**k off!

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