Events | 2009.12.04
RBS gears up for bonus scheme clash
Royal Bank of Scotland today insisted it would press ahead with its controversial bonus plans, despite rumours that a mounting political backlash would force it to back down. Directors, led by the chief executive, Stephen Hester , insist that future profits at the largely state-owned bank would be jeopardised if a clampdown on bonus payments led to a mass exodus of top staff.
Sources close to the bank said the directors expected a long battle with ministers and UKFI , the body set up to oversee government stakes in banks, amid public hostility to wealthy bankers and excessive profits in the City . A confrontation between the banks and the government looks certain in the run-up to Christmas as television and radio phone-in shows report almost unanimous popular opposition to RBS\'s bonus plans, with many people urging its directors to act on their threat to resign.
Confirmation that other banks are preparing to pay massive bonuses is expected to fuel public anger, and several City firms are understood to have taken extra security precautions to prevent protesters disrupting their business.
Lloyds Banking Group confirmed it has put in place a one-off share payment potentially worth up to 200% of salary to a small number of senior managers. The bank negotiated the deal with shareholders as it geared up to embark on its merger with HBOS at the beginning of this year.
A spokesman for Lloyds said its scheme was "very closely aligned" to the success of its merger.
HSBC reported profits of more than £6bn earlier this year in its investment banking business and is believed to be preparing to report a similar figure up to 31 December. Like most banks, HSBC has refused to disclose how much of its profits will be put into a bonus pool, but it could be more than double the £1.5bn that RBS is believed to be preparing to pay staff in addition to their salaries.
Barclays made more than £8bn profit in its investment banking arm last year and has already declared it is set for a record year in 2009.
Last week, the government went further with Royal Bank of Scotland and Lloyds Banking Group by demanding that all bonuses for those earning more than £39,000 a year be paid entirely in stock. However, the City minister, Lord Myners, said banks were expected to pay at least 5,000 staff bonuses of more than £1m each. He confronted senior executives in the Square Mile with demands that they "come back into the real world".
Gordon Brown played down suggestions that RBS would be singled out, saying that all banks would follow international guidelines, and "nobody is being discriminated against".
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http://www.guardian.co.uk/business/2009/dec/04/rbs-bonus-scheme-clash
