RBS boss Stephen Hester says bonuses are 'good value'
ROYAL Bank of Scotland chief executive Stephen Hester has defended the state-backed bank's pay policy, saying it offers 'good value' for taxpayers, as it paid out close to £1bn (€1.18bn) in bonuses despite a £2bn loss.
RBS said today it had reduced bonuses in its investment banking business to £390m, down 58pc from 2010, and across the bank as a whole, bonuses were £985m, down 21pc from 2010.
The bank has today reported a larger-than-expected loss for 2011 of £2bn, as it was hit by costs inlcuding an £850m provision against PPI mis-selling claims and writedowns on the value of its holding of Greek debt.
Mr Hester said this morning the bank's bonuses were "pretty good value for the taxpayer" because they were needed to attract staff with the skills to return the bank to profitability.
"If you want an RBS that is mired in the past, a British Leyland, then we should be judged on a different basis," he said.
The bank would not be able to recruit people with the message "come here, have a harder job and earn less", he said. "We will not accomplish our goals if that is the message."
George Osborne gave his backing to Mr Hester's strategy at the bank this morning. The Chancellor said: "The new management team at RBS are cleaning up the mess after the biggest ban bailout in history, just as the government is cleaning up the system of bank regulation that failed so badly.
“These results show that they are doing just that.
“We have made clear that RBS should be a backmarker in the industry when it comes to pay, so it’s right that bonuses at the investment bank are less than half what they were last year and less than a third of what they were in 2009.
“But our main interest should be to get back as much money as possible for taxpayers and we must not let those that want to create an anti-business culture put that at risk.”
Mr Hester said the public outrage over pay at the bank was making it harder to get the lender onto a stronger footing.
"The noise around RBS is damaging the prospects of RBS... nobody should be under any illusions, you can't have your cake and eat it, and the noise is damaging us.
Asked whether bonuses could rise, Mr Hester said he hoped so, because it would indicate the bank was becoming more profitable.
"What would delight me is if they were up, because that would mean the profits would be up."