The government has voted against RBS' bonus plans

Barclays' tumultuous day yesterday has nothing on RBS' pay problems: it's abandoned plans to raise bonuses after the government said it would vote against them.

by Emma Haslett
Last Updated: 25 Apr 2014

Barclays boss Antony Jenkins may have had to endure the humiliation of a large institutional investor standing up and publically telling him it was voting against his plans to raise bonuses.

Good job Standard Life doesn’t own 81% of its shares, though, eh? Sadly for RBS, one of its shareholders does own 81% of it: the Treasury, which has told the bank it will vote against plans to increase bonuses for RBS’ top brass to 200% of salary. There will be ‘no rise’ while RBS is ‘still in recovery’, it said, firmly. Given RBS needs 66% of shareholders to vote in favour of the rise, we’re inclined to agree.

For those not in the bankers’ pay loop, last year the EU introduced new legislation setting a cap for the bonuses of bankers earning more than €1m at 100% of salary, unless a majority of shareholders vote to raise that to 200%. Yesterday, Barclays’ shareholders decided overwhelmingly in favour of that (although a third voted against raising its total bonus pool). The Treasury, though, is stubbornly against it at RBS (as opposed to Lloyds, where it’s in favour – a reward for having ‘completed its restructuring’).

This is great PR for the government, which has coincidentally decided to take the ‘tough love’ approach a year before the election. It’s not so great for RBS, whose employees are already among the worst-paid in Europe, which means attracting anyone with any zing about them is becoming increasingly impossible:


Compared with Barclays and HSBC, RBS’ bonus pool is also depressingly small (although its pre-tax losses were sky high compared with competitors):


The legislation disproportionately affects British banks: we have by far the most millionaire bankers in Europe – 10 times that of Germany, the country with the second-biggest number.

Still, a couple of weeks ago the FT reported banks in Europe have found a convenient way to skirt the bonus cap, offering something called ‘role-based allowances’ rather than bonuses. It’s actually helping them recruit staff, reported the newspaper.

Spare a thought for chief exec Ross McEwan and chief financial officer Nathan Bostock, though, whose bonuses are being scrapped altogether from 2014. They’ll still get ‘long-term incentive rewards’, but only after five years, and only if they perform well. Who’d run a bank these days? It’s becoming an increasingly poisoned chalice.

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