RBS investment bankers in line for £500m bonus pot
The Royal Bank of Scotland (RBS) is set to defy the government by issuing banker bonuses and pay totalling £2.5 billion with the average investment banker set to receive a bonus of £140,000.
The banker bonus element of the total remuneration is thought to be 20 per cent of the total, £500 million. The amount paid to the average investment banker will be lower than payments made by rival banks. For instance, Barclays is expected to pay an average of £200,000. Barclays is not part-owned by the UK taxpayer.
Both the Prime Minister, David Cameron and the Chancellor, George Osborne have made repeated calls for bonuses to be lower this year across the sector as the economy continues to struggle and UK households continue to suffer the biggest decrease in living standards for over 50 years.
RBS is 83 per cent owned by the UK taxpayer and has had more than £50 billion of state money pumped into it when it was bailed-out in the autumn of 2008. The bank has mostly made losses since then and its share price has sunk. It started 2011 at around 45 pence a share and dropped to about 20 pence a share but has made a modest recovery in recent weeks and its shares are now worth 29 pence.
However, political leaders either have the inability or, contrary to public announcements, are likely to choose not to enforce their authority in allowing bonuses to be paid to a state-owned bank.
On Tuesday, business secretary Vince Cable will publish plans to tackle executive pay. It is expected that he will announce that companies have to publish the total remuneration of the chief executive of a company as one figure and that shareholder votes on company pay will be legally binding.
RBS is expected to reward its head of global banking and markets, John Hourican with 29 million shares as part of a performance bonus negotiated in 2009.
The chief executive of RBS, Stephen Hester, is said to be determined to take a bonus this year, thought to be in the region of £1 million.
The banker bonus season is now in full swing and leading investment banks have paid top staff mouth-wateringly high sums that seem to have no correlation to the performance of the banks.
Citigroup paid its chief executive a $16.7 million retention bonus and a $3.7 million share bonus despite its shares falling by 44 per cent in 2011. Meanwhile, Jamie Dimon, the chief executive of JP Morgan is expected to be paid $23 million, a similar amount to what he received last year, despite the banks’ shares falling by 20 per cent in 2011.
Moody’s the ratings agency recently warned that all western banks are facing credit downgrades because of the economic outlook and continued lack of a solution to the euro debt crisis.
Compare current accounts to find the rates and features you need.
Follow Myfinances.co.uk on Twitter: @news_myfinances
Sign up to the Myfinances.co.uk newsletter to receive the latest financial news direct to your inbox.
Comments
Newsletter sign up