RBS defends £607m bank bonuses and says sale ‘could start next year’

ROYAL Bank of Scotland claimed taxpayers could begin to recoup their £45bn bailout next year as it was forced to stave off swingeing criticism for handing out more than £600m in bonuses despite major losses.

The lender said it is a “reasonable aspiration” for the State to start selling off its 81 per cent stake in 2014, despite reporting £5.2bn pre-tax losses for 2012. RBS insisted its underlying business is on the mend, after shrinking dramatically in recent years. The bank revealed a £607m bonus haul for staff, including £215m for investment bankers, as it posted its fifth consecutive year of heavy losses. Labour Treasury spokesman Chris Leslie called for RBS to rein in “bloated bonuses”. But RBS chairman Sir Philip Hampton said they reflect “market reality”. Speculation is mounting over a possible share giveaway ahead of the 2015 General Election. But Sir Philip warned distributing shares to 40m taxpayers would be an expensive logistical nightmare.

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“Would you have to have every AGM at Wembley stadium and simultaneous (meetings) at all the other football stadiums across Europe in order to bring all your shareholders together?” he asked.

RBS was rescued with a £45.5bn bailout in 2008, and finance director Bruce van Saun said the Government’s stake would take a “number of years to sell”. RBS also hopes to resume dividends. Its losses surged from £1.2bn in 2011 after its £381m settlement for Libor rate-fixing. It also revealed another £450m in provisions to cover mis-sold payment protection insurance (PPI), taking total PPI charges to £2.2bn.

It also set aside another £650m for the mis-selling of interest rate swaps to small businesses, on top of £50m already put by, and said an IT fiasco cost it £175m. RBS will pursue a stock market flotation for 315 branches which Europe is forcing it to sell after a deal with Santander collapsed.