Loss-making bank plans £1.3bn bonus

PART-nationalised Royal Bank of Scotland is preparing to hand out huge bonuses to investment bankers in spite of expected annual losses of £7bn, according to weekend reports.

RBS, which is 84 per cent owned by the taxpayer, is in final discussions with the Treasury over its bonus pool this year.

The bank could pay out about 1.3bn to its investment bankers despite 14bn in bad debts.

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RBS declined to comment although chief executive Stephen Hester has said it will pay its bankers “the minimum we can get away with”.

But Mr Hester has stressed that the profitability of its investment banking arm will also be a key factor in an eventual return of RBS to the private sector.

Huge windfall profits among investment banks are in prospect this year, fuelled by state interventions to prop up the system following the financial crisis and reduced competition after the demise of players such as Bear Stearns and Lehman Brothers.

The final RBS bonus figure will be unveiled in the bank’s results at the end of the month, although RBS is likely to stress that the share of revenues being paid out in awards has been lowered to reflect public anger over bumper payouts.

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