RBS bonuses to be slashed

RBS bonuses to be slashed

Chancellor of the Exchequer Alistair Darling has announced that the Government has limited the bonus pot for staff at the Royal Bank of Scotland (RBS).

The bonus total for 2008 was £2.5 billion but this will be slashed to £340 million for 2009 - and is set to be paid in shares only, said Mr Darling adding “There would be no reward for people who have failed.”

Of the £340 million in bonuses to be paid out, £175 million will meet contractual obligations for some investment bankers, while the remaining £165 million will be paid to 80,000 “front line” staff through a profit share scheme.

Meanwhile, Mr Darling said that the same principles of “not rewarding failure” will apply to Lloyds Banking Group.

Bonus packages have been the subject to a lot of bad press recently and has sparked outrage among the public when it is banks who are being blamed for the recession.

RBS bonuses, in particular, have been subject to heavy criticism since last week former chiefs of the bank apologised “profoundly and unreservedly” for the near-collapse of their banks.

Commenting on the news, Conservative shadow chancellor, George Osborne, said “The government has finally been dragged into acting on bonuses but once again it is too little too late.”

Meanwhile, Liberal Democrat economics spokesman, Vince Cable, said “It is simply unacceptable that banks who have had to rely on taxpayer guarantees and handouts should pay bonuses to staff that are directly linked to their failures.”

In January, nationalised Northern Rock sparked outrage after it paid almost all of its 4,500 employees a 10% bonus - an average of £2,000 each.

RBS is almost 70% owned by the taxpayer and received an injection of £20 billion last autumn to prevent it from collapse.

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