Bonus row RBS unveils £2bn losses

Feb 23 2012

Taxpayer-backed Royal Bank of Scotland ran the gauntlet of public outrage as it unveiled losses of £2 billion and paid staff nearly £1 billion in bonuses.

RBS, which is 82% state-owned after receiving a £45.5 billion bailout at the height of the financial crisis, paid £785 million in bonuses last year, including £390 million for its 17,000 investment bankers.

While the total pot is 43% lower than the previous year, it follows a period in which the bank announced thousands of job cuts and chief executive Stephen Hester waived his £963,000 all-shares bonus amid a fierce row over bankers' pay.

Unions said the sizeable payout would "infuriate the workforce" while shadow business secretary Chuka Umunna said the Government had failed to ensure pay restraint as the bank's biggest shareholder.

Despite the £2 billion loss, underlying figures showed some promise for the bank, triggering a 3% rise in shares, with core operations - or the ongoing bank - reporting profits of £6 billion, while bad debts were slashed by 20% to £7.4 billion. RBS said it had exceeded its lending targets, including to small businesses, agreed between the top five banks and the Government last year.

RBS said the average bonus per group employee was £5,346, whereas the average bonus per investment banker was £22,941. Total staff costs, including salary, were down 9%.

The payouts came as the bank, which employs 146,800 staff, revealed wider total losses of £2 billion in 2011, compared with £1.1 billion in 2010, which included a near £1 billion hit for mis-sold payment protection insurance compensation.

The bank said pay for 10,000 senior employees across the group, and all staff at its investment arm Global Banking and Markets, would be frozen in 2012, while remaining staff would have an average pay rise of around 1%.

Unite, the union, said the bonus pot should be distributed to thousands of lower-paid, front-line staff at the bank. David Fleming, Unite national officer, said: "This hypocrisy will infuriate the workforce, who have continued to work under the hardest of conditions."

But Chancellor George Osborne said the Government's main interest was getting back "as much money as possible" for taxpayers and added: "We must not let those that want to create an anti-business culture put that at risk."