CEO McEwan wants to defuse public outcry
RBS poised ‘to stop paying cash bonuses’ to senior staff
Royal Bank of Scotland is close to announcing that it will stop paying annual cash bonuses to top executives in a move to designed to bring an end to the annual bunfight with politicians and the public.
Instead, it is considering paying senior staff in shares over a period of years, linked to performance targets, according to sources in the City.
It was thought the voluntary forfeiture of bonuses was a temporary move while the 79% state-owned bank continued to make losses and pay fines for previous bad behaviour.
But according to Sky News, chief executive Ross McEwan wants it to become a permanent arrangement.
The policy, if confirmed, would apply to McEwan and eight members of his senior management committee.
However, some will remain sceptical of the move, particularly as bank remuneration committees have hinted at hiking salaries to compensate for new caps on bonuses imposed by the European Union.
Under the new rules bank employees can be paid a bonus of up to twice salary. RBS lost a battle with the Treasury over exercising an EU clause saying awards could be higher if shareholders approved.
Investors and commentators alike are likely to ask what happened to the bank’s insistence on having to pay bonuses in order to retain good staff.
Some may prefer to believe that any move to abandon bonuses is more likely to be a result of political pressure from the bank’s majority shareholder.
George Osborne, the Chancellor, will not relish another series of headlines about greedy bankers just weeks before the General Election.