RBS boss to waive his annual bonus payment
Royal Bank of Scotland boss Stephen Hester is set to waive his annual bonus payment, it has emerged.
The chief executive is understood to be gearing up to decline a payout for 2009 after coming under pressure in the face of predicted hefty losses for the bank.
RBS, which is 84% taxpayer owned after a number of bailouts, is expected to report a shortfall of around £5.3bn when it announces its results on Thursday.
Mr Hester's decision not to take his bonus allocation comes after Barclays' top bosses opted to waive their right to payouts last week.
The RBS chief is in the midst of a five-year turnaround plan to restore the bank to health after taking on the job at the height of the financial crisis.
His remuneration package could reach £9.7m — which he has said even his parents think is too much — based on his efforts to restructure the bank as well as its profitability.
RBS is understood to still be in talks with UK Financial Investments (UKFI) — the body that manages the Government's stakes in bailed-out banks — over the overall size of its bonus pot.
RBS posted a record £24.1bn pre-tax loss for 2008 and is expected to have stayed in the red last year, although the shortfall is much narrower. The bank's high-earning staff will not be paid cash bonuses for 2009, although staff on less than £39,000 will be eligible for a bonus of up to £2,000.
Mr Hester has said the firm would pay its investment bankers “the minimum we can get away with” in the bonus season, but has warned that the bank must be able to attract and retain key staff.
Huge windfall profits among investment banks are in prospect this year, fuelled by state interventions to prop up the system following the financial crisis and reduced competition after the demise of players such as Bear Stearns and Lehman Brothers.
The bonus issue will resonate especially as both RBS and Lloyds Banking Group — itself 41% owned by the taxpayer — are expected to miss lending targets set by the Government in return for state support.