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Wednesday 26th of January 2011
December 4, 2009    

RBS has heated argument with the Treasury over bonuses

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by Kay Murchie

After a heated row with the Treasury, the Royal Bank of Scotland (RBS) has indicated that it will bow to pressure to cut executive bonuses.

It emerged yesterday that the board of RBS had threatened to quit under Government plans to veto bonus payments.

The threat of a mass exodus came as the bank said it was planning bonuses of £1.5 billion to staff in its investment arm for its performance in 2009.

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.

One of the conditions of participating in the scheme was to hand over control of its bonus pot to the Treasury.

However, the Financial Times has reported that pay-outs in RBS’ investment banking division would be “at the low, low end of the scale”.

Meanwhile, in response to the threat by RBS, City Minister Lord Myners said bankers need “to come back into the real world”.

Lord Myners said it was unrealistic that bankers should expect to be paid million pound bonuses.

It has also emerged today that 200 executives at Lloyds are set to receive one-off payments worth up to 80% of their annual salaries.

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