RBS boss to forgo £1m incentive

​Royal Bank of Scotland racked up another big annual loss today as it confirmed its chief executive is to forgo a £1​m slice of his pay packet.

The group, which is 80​ per cent​ owned by the taxpayer, posted a deficit of £3.5​bn, although this is down on the £9​bn reported a year earlier.

RBS also confirmed that Sir Howard Davies, the former head of the now defunct Financial Services Authority, will be its chairman from September. He replaces Sir Philip Hampton, who is set to join GlaxoSmithKline.

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The company’s bonus pool was cut by 21​ per cent​ to £421​m for 2014, while chief executive Ross McEwan said he will not take a £1​m “role-based” incentive, which is paid on top of salaries by some banks.

Mr McEwan also declined to take an annual bonus last year.

In a letter to Sir Howard, Chancellor George Osborne called on the new chairman to ensure the bank’s business is “conducted to the very highest ethical standards”.

He wrote: “Given the extraordinary support it has enjoyed in the past from taxpayers, I know you recognise that RBS must remain a backmarker on pay and continue to show responsibility and restraint.”

Since its rescue from the brink of collapse in 2008, RBS has focused on offloading many of its foreign and investment banking assets to become a more UK-focused bank centred on retail and commercial banking.

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Mr McEwan said he had not wanted his bonus to become a “distraction”.

He said it was “certainly not going to be months” before the bank was ready to return to the private sector, but it would be “much shorter” than 10 years.

RBS said the latest loss was attributable to a £4​bn write-down on the value of its US arm Citizens, having recently cut its stake in the business.

Operating profits were £3.5​bn​- the highest since 2010 - as RBS said it had made significant progress towards building a bank that is “stronger, simpler and better for both customers and shareholders”.

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Other one-off items included £2.2​bn of conduct and litigation charges, including £320​m in the fourth quarter relating to the rigging of foreign exchange markets and a further £400​m to cover compensation for the mis-selling of payment protection insurance.​