Business World

Monday 23 April 2018

RBS chief Stephen Hester’s £1m bonus branded ‘bewildering'

Harry Wilson

THE £1m (€1.2m) bonus awarded to Stephen Hester, the state-backed Royal Bank of Scotland chief executive, is "absolutely bewildering", according to Boris Johnson, the mayor of London.

RBS announced that Mr Hester would get a bonus of £963,000.

But the taxpayer-backed lender faced political and public pressure that the bonus was too generous. The award is 60pc of the maximum Mr Hester could have received.

Boris Johnson, the mayor of London, criticised the decision while Ed Miliband, the Labour leader, claimed it as a "disgraceful failure" of leadership by David Cameron to have allowed it to happen.

Mr Johnson said the "masters of the universe" bankers needed to learn to be "servants of society". He said it was "not on" to pay large bonuses when banks had been "floated off the rocks" by taxpayers.

The Prime Minister's official spokesman said this morning: "There is a contract in place, that contract was put in place by the previous Government. Under that contract he's entitled to be considered for a bonus in good faith and that bonus judgement is taken by looking at his performance against current objectives. That process is what happened here. It's a decision that was taken by the board of RBS. The Government had views on the bonus and it expressed those views and UKFI, which holds the public sector stake, was involved and took a keen interest in this issue."

The Opposition said that the scale of the payout showed the Government was "desperately out of touch" with voters and not serious about reining in executive pay and perks.

He added that taxpayer-owned banks should be run like "public service organisations", but that the "endless banker bashing" had to stop.

Nick Clegg has said he has a "lot of sympathy" with the public dismay over the bonus.

Speaking to reporters from a school in Solihull, the Deputy Prime Minister said it was Mr Hester's decision to take his bonus.

"I have a lot of sympathy with that Jeremy Browne said on television last night. There are some bankers who have decided not to take a bonus this year like the chief executive of Lloyds. It is up to Stephen Hester, that is his decision.

"The Chancellor and the Treasury have explained the frustrating realities of all of this, which is that if we ripped up the contracts that the Labour government have signed with them or changed the arrangements that manage our stake in the banks, the taxpayers would have ended up paying even more money. There are some frustrating realities to this, but Mr Hester needs to make his own decision.

"I have a huge amount of sympathy with peoples’ sense of dismay when they see these figures. They are seeing figures from another planet. There are these realities and these constraints and it is for each individual to make up their own mind."

Deputy Prime Minister Nick Clegg's chief political adviser Norman Lamb said he, and most people, would be "deeply uncomfortable with a bonus of that size".

And his Liberal Democrat colleague Jeremy Browne, a Foreign Office minister, issued an outspoken appeal to Mr Hester to put the taxpayer before his personal wealth and refuse to take the shares.

A Downing Street spokesman said Mr Cameron was "not relaxed" about the bonues, but pointed out that the proper process had been followed.

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