Government approves £1.3bn RBS bonuses

| February 24, 2010 | 0 Comments

The UK Financial Investments Ltd (UKFI) has written to the Royal Bank of Scotland (RBS) to approve its £1.3 billion in bonuses to its investment bankers.

The Treasury, through the UKFI, had the right to veto any bonus deal after the bank participated in the Government’s Asset Protection Scheme (APS) - one of the conditions of participating in the scheme was to hand over control of its bonus pot to the Treasury.

However, the UKFI, the body which was set up at the height of the financial crisis to oversee taxpayers’ interests in High Street banks, has written to the bank to give the proposals its blessing.

The news comes just a few days after RBS chief executive, Stephen Hester, opted not to take his £1.6 million bonus.

The bank, which is 84% owned by the taxpayer, will tomorrow announce its results for 2009 with analysts expecting losses of around £5 billion.

RBS will be the second major UK bank to report its 2009 results. Last week, Barclays announced record profits of more than £11 billion - a 92% rise on the previous year.

Last year, RBS reported a full 2008 year loss of £24.1 billion - the largest annual loss in UK corporate history.

Lloyds, which is also part-owned by taxpayers, will publish its full-year results on Friday.

The news of RBS’ bonuses comes as Eric Daniels, chief executive of Lloyds Banking Group, said he will waive his £2.3 million annual bonus.

Barclays chief executive John Varley and president Bob Diamond both agreed to sacrifice bonuses for the second year in a row, in light of the “intense public interest and concern” over bankers’ pay.

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