Darling's Banking Review to Stem 'Crass' Bonuses; Royal Bank of Scotland Criticised for Reported Pounds 1bn Bonus Package

Western Mail (Cardiff, Wales), February 9, 2009 | Go to article overview

Darling's Banking Review to Stem 'Crass' Bonuses; Royal Bank of Scotland Criticised for Reported Pounds 1bn Bonus Package


Byline: Nick Machin

CHANCELLOR Alistair Darling announced a review of bank practices yesterday amid condemnation of a reported pounds 1bn bonuses package planned by a bank being propped up by pounds 20bn of public money.

He warned bosses they should not reward "excessive risk-taking" as he launched the wide-ranging inquiry and said banks had to recognise their duty to the public.

Mr Darling unveiled the inquiry as it was reported that Royal Bank of Scotland (RBS) was in talks over the massive package with the body set up to manage the taxpayers' stake in bailed-out banks.

The claims over the scale of the payouts came just days after Gordon Brown warned RBS there should be "no rewards for failure" amid mounting anger over banks' behaviour.

RBS chiefs were said to be aiming to stem outrage by limiting the cash element being paid to each employee to pounds 25,000 with the rest made up in bank shares.

Most of the share options would be deferred or withheld if the employee left within a set period or if their part of the bank made "significant" losses in the next two years, it was reported.

Around half of the total would be "discretionary" payments with the rest money RBS is "contractually" obliged to give to employees of ABN Amro, the Dutch bank bought by RBS.

The total payout would be around 60% lower than last year's.

RBS, now 68%-owned by the Government, is due to report its 2008 results in three weeks, when it will confirm a loss of several billion pounds.

A spokeswoman said that the board was "yet to make a decision on remuneration policy for the year".

But Liberal Democrat Treasury Spokesman Vince Cable said the bonuses should be halted.

"This is unbelievably crass and irresponsible behaviour by people who have learned absolutely nothing and appear to have no standards of honesty whatsoever," he said. …

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