RBS board threaten to quit over bonus restrictions
The board of the Royal Bank of Scotland (RBS) have threatened to quit under Government plans to veto bonus payments.
Chancellor Alistair Darling is to be granted the right to veto bonus payments at the bank, following which the bank sought legal advice.
The threat of a mass exodus comes as the bank is planning bonuses of £1.5 billion to staff in its investment arm for its performance in 2009.
The RBS board is due to make its recommendation on bonuses early next year. The bonus pool of around £1.5 billion has to be signed off by the Government.
However, if the amount is not approved, then directors feel the only option is to quit, according to insiders.
The bank, which is currently 70% owned by the taxpayer, is soon to be 84% owned under the Government’s Asset Protection Scheme (APS), which insurers against losses arising from toxic assets.
Last month, the Chancellor announced that the Treasury, as the major shareholder in the bank, would have the “right to consent” to how much the bank pays in bonuses and how they are paid.
“Our agreed business plan requires us to operate commercially in competitive markets and this plan underpins the prospects of recovering value for taxpayers and shareholders alike,” the bank said.
However, the Treasury has already said it would step in if it was in the interest of taxpayers.
Bonuses have been a major topic of conversation this year and for RBS, in particular, after Sir Fred Goodwin (former chief executive of RBS) bowed to public pressure and agreed to hand over £4.7 million of his much-talked about £17 million pension.
Sir Fred, and ex-chairman Sir Tom McKillop, were both blamed for the near collapse of the bank.
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