Bonus round likely to cloud results season
Royal Bank of Scotland poised to name new chairman
Dame Alison Carnwath, the chair of Land Securities; Gus O’Donnell, a peer and former head of the civil service; and Sir Howard Davies, a former regulator, are among the names linked with the post after Lord Smith ruled himself out.
Despite recent continued speculation in the London press linking former Standard Life chief executive Sir Sandy Crombie with the job, he said last April that he would not take the job. As a senior non-executive director at the bank he is leading the search for Sir Philip’s successor alongside headhunters Egon Zehnder .
It is thought Chancellor George Osborne has interviewed the candidates himself, indicating a determination to ensure the bank operates within government guidelines. He and former RBS chief executive Stephen Hester disagreed over the bank’s strategy, in particular the scale of downsizing that the Treasury demanded.
Mr Hester’s departure and Mr Osborne’s close interest in hiring a compliant chairman may lead some to the conclusion that Sir Philip, who has been chairman since 2009, did not keep his chief executive under control.
Mr Osborne’s keen interest has prompted some to ask why he is so closely involved, given that the General Election is just three month away and the successful candidate may not even be in post by polling day.
Sir Philip will become chairman of pharmaceutical company GlaxoSmithKline later this year and his time in charge at RBS has not been short of drama. He claimed, somewhat prematurely, that the bank was ready to return to the private sector as soon as the government gave the signal to begin a sale of shares. That process remains some time away.
The taxpayer still owns 80% of the bank and in spite of Sir Philip’s defence of remuneration packages the issue of bonuses is expected to erupt again following another year of setbacks and penalties for the bank.
More positive news is that the shares are up 7% to 395p over 12 months and a return to profit for 2014 is expected with earnings per share of around 39p. The bank reported a third successive quarterly profit at the Q3 stage.
The bank is also likely to report progress on asset sales and improving capital ratios. However, there has been speculation that it will write down the value of its Citizens Bank in the US.
Bonuses will once again cloud news of the annual figures, especially at HSBC which is expected to hand its chief executive Stuart Gulliver a £7.4m pay and perks package. He took over in 2011, but was in charge of the global banking and markets division at the time that its Swiss private bank scandal hit its peak.
Barclays is thought to be lining up a bonus pot of just under £2 billion for its bankers – below the £2.4billion it paid last year.
State-backed Royal Bank of Scotland and Lloyds Banking Group are likely to pay more modest bonuses totalling around £875m – also down on the £975 lavished on staff 12 months ago.
Critics say the government should ban bonuses for the state-backed banks, while some go further and say none of the banks should be making awards. Mr Gulliver’s payout will be particularly controversial.
Simon Walker, of the Institute of Directors, has called for restraint, saying the “political imperative” of doing something about the link between long-term performance and financial reward for senior bankers “has never been greater”.