Tag Archives: Royal Bank of Scotland

RBS boss Stephen Hester says bonuses are ‘good value’

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RBS said today it had reduced bonuses in its investment banking business to £390m, down 58pc from 2010, and across the bank as a whole, bonuses were £985m, down 21pc from 2010.

The bank has today reported a larger-than-expected loss for 2011 of £2bn, as it was hit by costs inlcuding an £850m provision against PPI mis-selling claims and writedowns on the value of its holding of Greek debt.

Mr Hester said this morning the bank’s bonuses were “pretty good value for the taxpayer” because they were needed to attract staff with the skills to return the bank to profitability.

“If you want an RBS that is mired in the past, a British Leyland, then we should be judged on a different basis,” he said.

The bank would not be able to recruit people with the message “come here, have a harder job and earn less”, he said. “We will not accomplish our goals if that is the message.”

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More bankers should be stripped of bonuses after Lloyds claws back £1 million

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It is the first time a British bank has exercised a “clawback” option on executive pay packages since the financial crisis.

Nadhim Zahawi, a Conservative MP who has campaigned for banking reform, said other bankers should also face clawbacks.

He said: “It should set a precedent for other banks. For too long it has appeared to the public that executive jobs at big banks are a one-way bet, that no matter what you do you get a huge reward.

“That has to change so that negligent behaviour at the top of banks has clear consequences and punishments.”

The decision could pave the way for clawbacks at rival banks. Royal Bank of Scotland, which is 83 per cent owned by the taxpayer, was the second largest player in the PPI market behind Lloyds.

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RBS chief Stephen Hester: I considered resigning

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Mr Hester, who declined to accept the bonus after it caused a public outcry against excessive pay, admitted he faced some “deeply depressing moments” but concluded leaving the job would have been “indulgent”.

In an interview with BBC Radio 4’s Today programme, he said:

• accepting the bonus would have been “damaging” to RBS;

• bankers should be rewarded for defusing the “biggest time bomb in history”;

• hubris set in after years of expansion within the banking sector.

He was speaking after sending an email to RBS employees urging them to overcome attention of pay, which “makes the job harder”.

In it, he said: “We can’t control the outside world – whether the economic or the political one. That’s not unique to us. But if ever something has been proven over our last three years of history, it’s this – we can successfully overcome great obstacles.”

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At last, some justice for Testosterone Fred

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The City bonus culture is the financial sector’s version of Mine’s Bigger than Yours. No one in British banking was a bigger Willy Waver than Sir Fred Goodwin. His unchecked ego led the then chief executive of the Royal Bank of Scotland to purchase a diseased Dutch bank with slightly less care than your average person would take to buy a kettle. Testosterone Fred had to have ABN Amro; nothing and no one could stop him getting his hands on a prize which was worth “a whole load of nothing”, according to one horrified analyst.

The result was the worst financial disaster in British history; the taxpayer had to prop up the bank to the tune of £45.5 billion. Some tune; more like an unending funeral march. We will not know the exact toll in human misery for years to come, but at least Fred Goodwin has now been stripped of his knighthood – a humiliation described by one wag as Sircumcision.

For the ultimate Willy Waver to be Sircumcised feels like poetic justice, and long overdue, but protests began immediately that this was “mob rule” and anti-business “hysteria”. The Government, critics shrieked, had “bowed to public anger”. Shocking in a democracy to accede to what most decent people believe is only fair and right, isn’t it? If seeing a man lose a privileged title for his arrogant folly is mob rule, then kindly pass this tricoteuse her knitting needles.

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Blocking RBS bonus ‘would cause chaos’, Iain Duncan Smith warns

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Mr Duncan Smith said the Government would welcome it if Mr Hester, the chief executive of Royal Bank of Scotland, turned down his bonus of £963,000.

But, he said, the agreement drawn up when the bank was rescued by the state in 2008 meant the Government could only block the payout by deposing the board, which would cause “chaos” in the financial system.

“I’ve heard a lot of talk about what the Government can do and can’t do. The reality is the contract we inherited from Labour means very clearly the board takes the decision on this. You can’t interfere and tell them what to do. If we didn’t like that, the only option would be to get rid of the board,” he told the BBC’s Andrew Marr Show.

“Now if you do that imagine what would happen in the banking sector. Imagine what would happen to RBS. You’d have chaos. RBS’s balance sheet is as large if not slightly larger than the GDP of the UK. What would that do to ordinary people?

“We need to get this bank to a point where we can sell it back and get the money for the taxpayer which has been put in.”

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