The Royal Bank of Scotland (RBS) has bowed to government demands to slash investment banker bonuses to £175m and scrap any performance-related payouts.
The banking group revealed it was only paying bonsues to investment banking staff where it needed to meet contractual obligations, reducing the total bonus pot from an estimated £1bn to £175m. All other staff, whether directly involved in the banking failures or not, would not receive any bonuses, RBS said.
Instead, 80,000 staff working in RBS branches, who are used to a 10% bonus on top of their £18,979 salary, will receive a 10% pay rise costing RBS £165m. Any future bonus schemes will be abandoned.
An RBS statement said: “No bonuses or pay increases will be made to staff associated with the major losses suffered in 2008. As previously announced, board executive directors will receive no bonus for 2008 performance and no pay increase in 2009.”
Chancellor Alistair Darling today added: “We want to see a cultural change where short-term bonuses are replaced with incentives for the long term.”
Bonuses at the bank have been cut to “the minimum it can with regard to its legal obligations”, Darling added.
An RBS spokeswoman told Personnel Today the cuts would affect all staff, not just those involved in the banking failures.
Last week, Barclays bank announced it was halving bonuses for 2008.
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