The RBS board and its chairman Sir Philip Hampton are determined to press ahead with chief executive Stephen Hester’s bonus of roughly £1.3-1.5m alongside a salary of £1.2m.
RBS, which is 83%-owned by the taxpayer, said Hester has reduced the bank’s exposure to risk and slashed £600bn from its balance sheet in line with a strategy approved by the government, according to the FT.
One senior banker suggested Hester’s refusal of the bonus would “demoralise staff,” making it feel part of the civil service not a financial services institution.
This political hot potato couldn’t come at a worse time with Vince Cable set to announce plans to curb executive pay next week.
The RBS share price has fallen 43% in a year, wiping £11bn off its market value.
Chris Leslie, Labour’s Treasury spokesman said: “When the share price at RBS has fallen over the last year, bonuses of this size will look to millions of hard-pressed families like a huge reward for failure.”
Pressure has mounted on Hester since António Horta-Osório, his opposite at Lloyds, the other part-nationalised bank, refused his payout worth £2.4m.
The Prime Minister is due to outline his ideas about “moral capitalism” in a speech on the economy later today.
The prime minister is expected to demand greater transparency in pay and bonuses to try to prevent what he has called “rewards for failure.”
