RBS defends £1.3 billion bonuses despite massive losses
RBS defends £1.3 billion bonuses despite massive losses
Thursday 25th February 2010
Royal Bank of Scotland has defended plans to pay out £1.3 billion in bonuses for 2009 despite announcing it made a £3.6 billion loss last year.The troubled bank is now 84 per cent owned by the taxpayer following a huge government bailout after reportedly being hours away from collapse at the height of the credit crunch in 2008.
Stephen Hester, the bank's chief executive, has waived his own million pound bonus this year, like the CEOs of all the main British banks, but the decision to still pay huge bonuses to his staff will cause yet further public outrage.
A series of campaigns, including one led by musician Billy Bragg, have protested against the decision to continue with the payouts.
RBS' loss last year was actually considerably less than the £24.3 billion posted in 2008. The bank, however, did unveil a sharp rise in losses on bad loans, up to £13.9 billion from £7.4 billion the year before, although RBS claims these may now have peaked.
Defending the bank's bonus system, Mr Hester claimed the bank was actually losing out in not paying out bigger packages.
"We've had a small experiment in this respect… some of our best-performing people have been leaving in their thousands," he said on the Today programme.
"The people who left us last year, I believe, would have increased our profits by up to a billion beyond the ones that we've got."
RBS is struggling to compete with his competitors on pay because staff earning more than £39,000 will be paid bonuses in shares and deferred in equal instalments over three years.
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