Royal Bank of Scotland (RBS) is facing shareholder discontent at its annual meeting tomorrow over £607 million of staff bonus handouts during a year when it lost £5.2 billion.
Payouts by the 81 per cent state-owned bank are likely to infuriate investors after a “chastening” 2012 when a £390m settlement for Libor rate-fixing, another £1.1bn of mis-selling provisions and a £175m IT fiasco drove losses deeper from £1.2bn in 2011.
But the bank will argue it is on a stronger footing and should be ready for a return to the private sector by next year.
Earlier this month, RBS swung out of the red with pre-tax profits of £826m for the first three months – its best performance since the third quarter of 2011.
Chief executive Stephen Hester said: “The clean-up of RBS can be accomplished under our own steam in the next year, year-and-a-half. I think we will be substantially done next year.”
That could see the Treasury begin selling its stake in the bank next year, handing a pre-election boost to Chancellor George Osborne.
Shareholders will gather for the meeting at the bank’s Gogarburn headquarters in Edinburgh, where the lender is likely to face questions on pay. While its £607m bonus pool in 2012 was down 23 per cent on £789m a year earlier, it included £215m for investment bankers.
However, the bank said it was recouping £302m for its Libor settlement by cutting the 2012 bonus pot, clawing back from previous years and reducing current year awards.
Shareholder advisory body Pirc is calling for investors to reject its pay report over excessive rewards.
It said: “The bottom line is that the bank, similarly to its major competitors, has a remuneration structure which can lead to excessive pay.”