Saturday, Nov 1, 2008
Royal Bank of Scotland, which is being bailed out with £20bn of taxpayers’ money, has signalled it is preparing to pay bonuses to thousands of staff despite government pledges to crack down on City pay.
The bank has set aside £1.79bn to cover “staff costs” – including discretionary bonuses – at its investment banking division for the first six months of the year alone. The same division caused a £5.9bn writedown that wiped out the bank’s profits for the same period.
The government had demanded that boardroom directors at RBS should not receive bonuses this year and the chief executive, Sir Fred Goodwin, is walking away without a pay-off. But below boardroom level, RBS and other groups are preparing to pay bonuses to investment bankers who continue to generate profits.
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The disclosure drew fierce criticism from Vince Cable, the Liberal Democrat Treasury spokesman.
“The government said they would attach strict conditions on bonuses and it is very clear they are doing nothing of the kind.
“The banks are just making complete monkeys of them.”
He suggested the government would not have agreed to bail out any standalone investment bank. RBS and others had become “entangled with casino-style investment banking operations”, he said.
Despite the continuing financial turmoil and widespread criticism of the bonus culture in the City, the bank is understood to believe the payments are defensible.
This article was posted: Saturday, November 1, 2008 at 5:35 am