RBS directors threaten to quit if bonus billions withheld

RBS directors are threatening to quit if the Treasury stops bonus payments to staff in its investment arm, thought to be worth £1.5bn, according to reports.

It emereged yesterday the bank, which is 84% state-owned, will now have to agree the size of this year’s payouts with UK Financial Investments (UKFI), the body set up to manage the public stakes in banks.

Chancellor Alistair Darling indicated that he would be prepared to veto the bonus payments, which are 50% higher than last year, if the bank did not comply.

RBS directors have been advised by the bank’s lawyers to resign if a Treasury bonus veto means they are unable to run the bank commercially and in the best interests of all shareholders, he Times has reported.

A Treasury spokesman told the Press Association: “As a major shareholder, UKFI needs to be satisfied that RBS’s approach to remuneration is in keeping with the FSA’s code of practice.

“We expect other institutional shareholders will be equally concerned to ensure remuneration practices do not pose a risk to the stability of the organisation.”

Lord Myners said, at question time on Wednesday, that there was “precious little evidence” that people at the top of banks appreciated “the concern about these extraordinary levels of income”.

He told the Lords: “I would estimate that at least 5,000 people working in the banking industry in the UK will receive, if nothing is done, remuneration in excess of £1m this year. I think the real responsibility here must lie with the shareholders.”

TUC general secretary Brendan Barber said: “The banks nearly brought down the whole economy only a year ago. Few would have survived without government or Bank of England help. Yet now we learn that they are back to the bad old days when they confused their telephone numbers with what they were paid.”

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