RBS bows to government pressure over bonuses

Royal Bank of Scotland has bowed to government pressure and conceded that there will be no bonuses or pay increases for staff associated with the major losses suffered in 2008.

No discretionary cash bonuses will be paid in 2009 for performance in 2008. Only legally binding guaranteed bonuses will be paid. Total cash bonus payments for 2009 will amount to £175m.

Therefore total cash spend overall will have been reduced by more than 90%.

As previously announced board executive directors will receive no bonus for 2008 performance and no pay increase in 2009.

On average, other staff will receive below inflation pay rises.

RBS says that it’s taking a fundamental review of its approach to future remuneration to ensure that incentives are well aligned to the interests of shareholders over the long-term

Sir Philip Hampton, group chairman at RBS, says: “A fundamental reform to pay and reward is needed to reflect the reality of the situation the company is in.

“We fully recognise, as a Company, that we have to change materially not just the business we do but also the way we do business.

“Our staff have had to contend with significant anxiety over recent weeks and months over a situation that the vast majority bore no responsibility for creating.

He adds: “We have tried, wherever possible, to focus the worst impact of the changes on our more senior staff and, in particular, those in the concentrated areas of our business responsible for the major losses recorded in 2008.”