RBS has no cause to congratulate itself

Having incurred a loss of more than £1 billion and an unacceptable volume of customer complaints, it is a mystery to most why the chief executive of RBS and his senior executives should have received any bonus at all for 2010.

That UKFI, the government body holding 83 per cent of RBS for the government, allowed the pay resolutions to pass at the bank's AGM yesterday cannot be taken as representative of the view of taxpayers in whose name they acted. RBS chairman Sir Philip Hampton may regard the approval of the resolution giving his chief executive, Stephen Hester, a 7.7 million pay package a cause for congratulation for his remuneration committee. No-one in the body of the RBS annual meeting was in a mood to join in.

But now we must look to the future, and the board now has no excuses not to deliver on three key fronts: a significant increase in the volume of business lending; concrete progress towards the sale of the state's shareholding back to the private sector at a price that at least pays back the taxpayer; and swift action on that damning level of customer complaints. As for future bonuses, these must be contingent on the resumption of dividend payments to shareholders. The board has a responsibility to ensure that those who have borne the risk and supported the bank through the blackest period in its history take precedence over the hired hands with the golden gloves. When the directors recommend dividend resumption, it is this, not outrageous bonuses to a select few that should be the cause for the chairman's congratulation.