Pressure on Government to slash RBS payouts after global banking retreat on bonuses

By
Simon Duke
Last updated at 9:59 PM on 19th January 2010
A global clampdown on bankers’ bonuses is piling pressure on the Government to curb a £1.5billion bonanza at Royal Bank of Scotland.
A public outcry over fat-cat pay is forcing international banks and some countries to reconsider the end-of-year bonuses which are due in the next few weeks.
RBS, which is 84 per cent owned by the taxpayer, is expected to pay up to £85,000 to each of its 17,500 staff at its investment bank after profits at the division soared last year.
Row: Royal Bank of Scotland is currently due to hand out around £1.5billion in bonuses despite being 84 per cent owned by the taxpayerBut in a hugely symbolic move, the Dutch government yesterday
took a strong lead by imposing brutal pay restrictions on its
nationalised lender, ABN Amro. One of Europe’s biggest banks, Credit Suisse, followed suit as
it took an axe to payouts for senior UK staff in response to Chancellor
Alistair Darling’s ’supertax’ on bonuses.

Meanwhile, American investment bank Goldman Sachs was forced
to delay telling its staff how much they will receive in salary and
bonuses because of President Barack Obama’s planned levy on Wall
Street.
Tackling the issue: Vince Cable said the nation did not want ‘unstable banks‘
Yesterday’s three announcements throw into sharp relief the
payouts RBS is planning to lavish on staff at its ‘casino’ banking
wing. RBS chief executive Stephen Hester vowed to pay the ‘minimum
we can get away with’ after his bank’s £45billion bailout. But he is
still expected to pay out around £1.5billion after profits at the
division soared last year. Coming just over a year since the financial system came within hours of imploding, the expected RBS bonus round has provoked a storm of public outrage.
The Liberal Democrats’ Treasury spokesman, Vince Cable, said
last night: ‘This underlines the point that there are no bolt-holes for
banks. ‘The Swiss, in particular, are looking to tackle the issue of pay.
‘They don’t want unstable banks any more than we do.’
Earlier this week, singer Billy Bragg launched a campaign on Facebook to halt the ‘excessive’ payouts.
Some 5,000 people have joined the activist, saying they will
withhold their taxes unless the Government asserts its authority over
RBS. Yesterday the Dutch government moved to curb pay at ABN Amro.
Bonuses will be slashed by 65 per cent and salaries for top executive
will be capped at £540,000. Ironically, the decision by former RBS boss Sir Fred Goodwin
to mastermind the £50billion break-up of ABN Amro almost brought down
the Scottish bank. The deal’s toxic legacy forced the Government to
nationalise RBS. ABN Amro itself was carved up, with the Benelux operations
sold to Belgian financial group Fortis, which collapsed in late 2008
before the Dutch government stepped in. Yesterday Credit Suisse slashed the bonus pool for its senior UK staff after buckling to official pressure.
Some 400 London-based managing directors of the firm will see their payouts cut by 30 per cent in the wake of the UK supertax.

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