Royal Bank of Scotland Bonuses of £10 Million in shares.
Nine bankers in RBS got £10 million worth of shares. Of these one banker got nearly £6 million. In 2009 RBS made a loss of £3.6 million, which was down from the 2008 loss of £28 million. This announcement was made after the stock exchange closed on Friday 5th March.
The bank offered 3 justifications for these bonuses.
Justification One: This level of bonuses will keep the "good people" who will help to eventually repay the £54 billion of tax payers money back to the government.
Justification Two: Thousands of the best staff have already left in the last year to other banks.
Justification Three: The treasury will get a windfall of about £25 billion from taxing these bonuses. This creates the possibility of full repayment within 2 years.
The new rules over bonuses state that anyone earning over £39,000 per annum cannot get bonuses as cash. Instead payment is in shares which have to be held for years before being cashed. Further, they are subject to clawback under certain conditions. The Chief Executive Officer was offered, and refused, £2.4 million in shares.
All this presents a plausible picture for enriching a small number of employees at, or near, the top in the bank. But it raises some questions.
Firstly, how do those who remain in the bank after thousands of the good people have left, become good themselves? Is there any training in the bank? Is there any increase in pay for those less good, and lower down in the hierarchy?
Secondly, given the 84% control the government has over RBS, did the government know of the above details before the bank published them? Did the government give explicit approval? Will other shareholders in the bank approve?
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