Royal Bank of Scotland faced anger over bonuses as it revealed a £576 million handout to staff despite slumping into the red by £8.2 billion and admitting losses had now reached £46 billion over the past six years.
Chief executive Ross McEwan pledged to rebuild trust in the group with a mammoth overhaul that will slash costs by £5 billion within three years and see it shrink from seven divisions to three.
He warned of further job losses, with back-office staff expected to be hit in particular, but said the moves were necessary to nurse the group back to health and create a “smaller, simpler and smarter” bank.
“We cannot spend money as though we are in profit when we have lost £46 billion in six years,” he said.
Shares tumbled by 8%, wiping around £1.7 billion off its stock market value after the full scale of its losses were revealed. But the taxpayer-backed lender still shared out more than half a billion pounds in bonuses, including a £237 million windfall for its investment bankers, paying out £23,010 on average for each employee in the markets division. Mr McEwan defended the bonus pot, which was 15% lower than in 2012, saying: “We need to keep people engaged in the job they do all day every day - from the high street to those in our markets business in the United States. “We need to pay these people fairly in the marketplace to do the job.”
RBS, which is just over 80%-owned by the Government, has already sought to deflect flak over bonuses by scrapping 2013 payouts for its eight-strong executive committee in the wake of recent hefty provisions, while Mr McEwan has already said he would not take a bonus for 2013 or 2014.But it failed to calm fury over banker pay, given the mammoth losses and as it remains under investigation over allegations of unscrupulous treatment of small firms. The group is facing a series of investigations after a shocking report from Government adviser Lawrence Tomlinson accused RBS of driving firms to collapse to profit from their property assets.
Trade union Unite said the bank’s bonus revelation was an “astonishing betrayal”.
Unite national officer Rob MacGregor said: “This is a state-sponsored grab by greedy senior bankers.”
Business Secretary Vince Cable said: “If RBS is to become the sensible, boring bank envisaged by the chief executive, the bonus culture will have to go.”