RBS says UKFI to reject any bonus payment proposals
THE body responsible for managing Britain's stake in the Royal Bank of Scotland will block any resolution proposing the lender pays out bonuses of up to 200pc of fixed pay, the bank said on Friday.
Under a new European Union rule, which will apply to awards handed out from early 2015, bankers' bonuses can be no higher than fixed pay, or twice that level with shareholder approval.
RBS said all its major UK and European competitors had indicated that they would seek approval to award bonuses of up to 200 percent of salaries, which was "emerging as the sector norm" and something its shareholders had understood as the "best commercial solution" for the bank.
But in its annual report released on Friday, RBS said UK Financial Investments (UKFI) had informed it of its opposition to a 2:1 variable-to-fixed pay ratio and therefore the board would not bring forward such a proposal at its annual general meeting.
"The board acknowledges that this outcome creates a commercial and prudential risk, which it must try to mitigate within the framework of a 1:1 fixed-to-variable compensation ratio," it said.
RBS, which is 81-percent owned by the taxpayer, in February posted a £8.2bn pretax loss for 2013 due to restructuring costs and misconduct charges.
It said it would pay bonuses it was paying out £576m in staff bonuses for 2013, down 15pc on the previous year.