Libor-hit RBS set to pay £250m in bonuses

By TOM PETERKIN
Published on 29/01/2013 22:03

POLITICIANS and trade unions have warned that customers and businesses would lose out as RBS prepares to pay out up to £250 million in bonuses to staff in the investment arm implicated in the Libor scandal.

The publicly funded bank is shortly expected to announce the bonuses it intends to pay to investment bankers, as it braces itself for a £500m fine for its role in the Libor-rigging, which saw financial institutions manipulate the interest rate for profit.

The bank, which received a publicly funded £45.5 billion bail-out in 2008 and is 82 per cent owned by the state, is expected to pay about £400m to US authorities and £100m to the UK’s Financial Services Authority.

The prospect of the taxpayer footing another enormous bill on behalf of the bank angered politicians and trade unionists.

Stewart Hosie, the SNP Treasury spokesman, said: “The size of this potential fine shows that the Libor scandal goes beyond Barclays and will likely go beyond RBS. The bank must pay this, but must not draw from taxpayers’ funds to do so, and whatever action they take must not impact on banks lending to business.”

Dominic Hook, the national officer for union Unite, said: “Once again, it looks like ordinary bank workers and taxpayers will pay the price for the greed at the top of RBS. It is time George Osborne put his foot down..

“The RBS division implicated in the Libor scandal is set to reap huge financial rewards, but innocent workers in call centres and branches up and down the country are having their jobs cut, pensions slashed and terms and conditions eroded.”

Mr Hook added: “Unite has written to the chair of UKFI [UK Financial Investment Ltd, the body managing the government’s investment in RBS] to call for an urgent meeting.”

Controversy over the size of bank bonuses is likely to be inflamed by reports that Barclays is in talks with shareholders over plans to give new boss Antony Jenkins a performance-related payment of more than £1m.

Reports yesterday suggested that investors are being consulted about the bonus, despite Barclays having to allocate almost £2bn for fines relating to rate-rigging and mis-selling scandals.

The extra payment for Mr Jenkins, who was appointed chief executive following the resignation of Bob Diamond last year, would be part of an overall bonus pot, which will fall from £2.2bn last year to between £1.5bn and £2bn.

When Mr Jenkins was appointed, it was announced he would be paid a base salary of £1.1m with a potential annual bonus of £2.75m and a package worth up to £8.6m a year.

Last night, an RBS insider argued that the bonus culture at the bailed-out bank was not as generous as its competitors.

The insider said: “Bonuses are down 70 per cent in the last two years – £390m last year compared with £1.5bn at Barclays. They are at the bottom end of the scale.

An RBS spokesman said: “Discussions with various authorities in relation to Libor setting are ongoing.

“We continue to co-operate fully with their investigations.”