RBS in new bonus revolt
ROYAL Bank of Scotland is bracing itself for mass resignations within its investment banking division, after Government threats to veto their bonuses.
Sources say that morale within RBS’s Global Banking and Markets unit is at an all-time low due to a series of attacks on the bank and the Treasury’s power to veto their 2009 bonuses.
The Treasury gained the veto as part of the deal that saw the taxpayer insure RBS against any future toxic-credit investment losses.
RBS’s investment banking division has performed strongly this year and bankers were expecting their 2009 bonus pool to be worth about £1.5 billion, a 50 per cent rise compared with 2008.
However, with the threat of a Treasury veto hanging over their bonus payments, many RBS bankers say they have had enough of feeling “persecuted” and are looking to leave in the New Year. Sources at RBS say many bankers have already lined up new jobs.
The bankers were already angry because RBS had scrapped cash bonuses earlier this year. RBS agreed to Treasury demands that it pay all future bonuses in shares or bonds, rather than cash, and spread payments over three-year periods.
One senior RBS banker said there was little chance of the bank being able to repay the taxpayers without the vast profits generated by its investment banking division.
He added: “People here are not happy and will walk if the restrictions are too harsh.”
Another said: “They should just pull the plug or make a decision and let it (RBS’s investment banking division) be commercial.”
Last week it emerged RBS’s board had received legal advice that they would have to resign if the Treasury used its veto to block them from paying bonus payments they regard as being necessary to keep key employees and maintain the bank’s competitiveness.
Separately, it has emerged that RBS has put £3 billion of ineligible investments into the Asset Protection Scheme, the State-backed toxic-debt insurance fund.
According to a circular sent to shareholders about its APS participation, RBS has put derivatives and other volatile assets into the APS and it will negotiate with the Government about insuring them at a later date.
Unions are to ballot Lloyds Banking Group employees on a new pay and pensions deal offered by the bank. It would see final-salary pension benefits, sick pay and overtime rates slashed.
