One personal and business bank account provider has been called into account for paying out £785 million in bonuses to staff members even as it posts almost £2 billion in losses for 2011, experts say.
High street banking provider RBS, which is 82 per cent owned by the taxpayer thanks to its massive £45 billion government bailout, paid an average of £5,346 to every group employee. However, each of the 17,000 investment banking employees of the bailed-out bank received an average of £22,941, accounting for nearly £390 million in bonuses altogether.
Bonuses paid to bankers have been highly scrutinised in the aftermath of the credit crunch and resultant economic downturn, with savings account holders and ministers alike calling for performance criteria and pay structures of banks to be overhauled. This pressure led Stephen Hester, RBS chief executive, to even waive his own £930,000 yearly bonus, though he has come out in defense of the rest of the staff bonus payouts.
Mr Hester said in a recent interview that RBS believes in pay for performance. In defense of that statement, the chief executive said that bonuses paid in 2011 were reduced by 43 per cent in order to reflect performance versus 2010 figures, and that the investment banking division had its bonuses reduced by 58 per cent after its 2011 profits were down by half in comparison to last year’s figures, and even with the £2 billion posted loss, the core banking operations of RBS reached profits of £6 billion and cut its bad debts down to £7.4 billion, a reduction of 20 per cent.
In related news, Lloyds Banking Group remarked recently that it has plans to reclaim approximately £2 billion paid out to ten executives in the form of bonuses due to their involvement in the mis-sold Payment Protection Insurance scandal.