THE BOSS of the taxpayer-funded Royal Bank of Scotland (RBS) will be paid a bonus of almost £800,000 just days after his bank was fined £391 million for rate-rigging.
• Bank had pledged to claw back bonuses to pay fine.
• RBS says Hester has had just single bonus since joining troubled lender.
Stephen Hester, chief executive of RBS, will be given about £780,000 in shares next month as part of a reward scheme for his performance in 2010.
Mr Hester will be handed the shares next month, and will be able to cash them 12 months later. The exact value will depend on the share price when he cashes them in.
Mr Hester said last week he would stay to “finish the job” at the bank despite evidence from US and UK authorities over its role in the Libor scandal, dating back to 2006 and continuing till late 2010 – when investigations had already begun.
RBS, which is 81 per cent owned by the taxpayer, will recoup about £300 million from its staff bonus pool and clawing back previous awards to pay for the fines.
Mr Hester’s payout next month is the second tranche of a two-part reward scheme that was announced in 2011.
Lord Oakeshott, the Liberal Democrat peer, said: “It is wholly unacceptable that Hester should receive a bonus for 2010 when these scandals were still going on.
“He had been captain of the ship for two years but the crew was still robbing the passengers.”
Mr Hester’s bonus comes at a sensitive time for the Edinburgh-based lender, which was rescued from collapse in 2008.
Last week, RBS agreed to pay out £390m, including £87.5m to the British financial watchdog, after admitting staff had manipulated Libor, a key benchmark interest rate.
In an apparent attempt to boost their bonuses, some 21 RBS traders had been involved in the manipulation.
Last night Which? executive director Richard Lloyd criticised the banking industry and the culture of huge bonuses.
He said: “Recent scandals have decimated consumer confidence in the banking industry, and the public will be rightly outraged if senior bankers get huge bonuses despite their failings.
“2013 must be the year that we finally see big changes in banking, with banks that work for customers, not bankers. Excessive bonuses shouldn’t even be contemplated where there is evidence of mis-selling or rate-rigging, and past bonuses should be clawed back from those senior executives who have presided over wrongdoing.”
Mr Lloyd added: “Justifiable levels of pay and bonuses, individual accountability, and properly enforced professional standards are urgently needed to change the culture of banking.”
Last week, consumer groups questioned bonuses for bankers in the light of both rate-rigging and the on-going scandal over PPI, which has cost the industry £12bn and rising.
Defending Mr Hester’s bonus, Sir Philip Hampton, RBS’s chairman said: “We are not contemplating clawing back Stephen’s bonus award that was made in 2010. Stephen has only had one bonus out of four years, which we think is already quite a severe level of claw-back through a different route.”