Royal Bank of Scotland: I’ve hundreds of letters of support from the public, claims Stephen Hester

By TERRY MURDEN and ANDREW WHITAKER
Published on 24/02/2012 12:27

ROYAL Bank of Scotland boss Stephen Hester has revealed he has received “hundreds of letters of support” from the public despite the continuing row over bonuses and the shortfall on its taxpayer bailout.

After announcing a £2 billion bottom line loss – its fourth in a row – and a £785 million bonus pot, he told The Scotsman yesterday that the public controversy surrounding RBS was his biggest concern.

It impacted on staff morale and did not help with his attempts at turning around the bank. In a defiant and wide-ranging interview he defended the bonuses being paid and challenged those criticising the bank to understand what he was trying to do.

“The one thing I would like to remove most is the public controversy around RBS. Part of the public likes to kick the bank and a part of them sees the need for us to recover. It would help if the second group was more powerful than the first.”

He said he was not unrealistic and understood the way people thought at times of austerity, but he hoped the outside world would “give us some credit”.

Mr Hester’s comments came as more questions were asked by commentators and politicians about the size of this year’s bonus pot and how long it would take for the taxpayer to get back the £45bn invested in bailing out the bank three years ago.

He said: “If the public wants us to be like another ministry of government then we can abolish bonuses. But we would also abolish any chance of £45bn being recovered.”

Politicians were increasingly aware of the need to support the bank as a means to get the country back to growth, he said, but while not wanting to criticise the public he added: “The public discourse has made the recovery of RBS harder.”

Even so, he was encouraged by those who understood his task. “Even during the controversy of the past two months I have got hundreds of letters of support from the public,” he said.

But he admitted that the row over bonuses and the bank in general had contributed to a “brain drain” of good people. “Involuntary turnover, as we refer to it, has been higher than historic levels and continually worries us,” he said. “I cannot say it is about pay or people feeling beaten up but it is higher than for a normal company.”

He said the pressure on bonuses and the public’s attitude to RBS “reduces the number of people who talk to us about a job here”.

He said he could foresee the bank returning to a bottom line profit within two years but declined to say whether bonuses would be lower or higher this year. The bonus payouts led to a call for Chancellor George Osborne to “step-in” and suspend any further bonuses within RBS.

Senior SNP MSP John Wilson, the deputy head of Holyrood’s economy committee said RBS should stop all bonus payments until the bank had fully repaid the Treasury bailout.

Unite, the union, which represents banking workers, said the bonus payments should be distributed to thousands of lower-paid, front-line staff at the bank.

David Fleming, Unite national officer, said: “This hypocrisy will infuriate the workforce, who have continued to work under the hardest of conditions.”

Mr Osborne said the Government’s main interest was getting back “as much money as possible” for taxpayers and added: “We must not let those that want to create an anti-business culture put that at risk.”

Mr Wilson went on to call on the bankers handed the bonuses in the latest round of payments to forgo the awards.

Labour’s shadow Scottish secretary Margaret Curran called on the UK Government to curb bonus payments as part of a shake-up of the rules in the banking sector.

She said: “This will not be well understood by ordinary Scottish families dealing with pay freezes, unemployment and a rise in the cost of living.”

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