RBS losses total £8.2 billion

Friday 28 February 2014

Royal Bank of Scotland revealed a £576 million bonus pot for staff today despite slumping deeper into the red with annual losses of £8.2 billion.

The bonus pot - down 15% on 2012 - includes a £237 million payout shared among its investment bankers. The taxpayer-backed lender, which is just over 80% owned by the Government, saw losses widen significantly from £5.3 billion in 2012 after taking a £3.8 billion provision for a string of scandal-related charges and a £4.8 billion hit for the creation of an internal "bad bank".

Chief executive Ross McEwan outlined a revival plan to make the bank "smaller, simpler and smarter" that will see it shrink from seven divisions to three and overhaul its service and products for retail customers.

Deputy Prime Minister Nick Clegg said RBS was "in a different category" from other banks because it is largely taxpayer-owned and should show restraint on pay and bonuses.

Mr Clegg told ITV1's Daybreak: "A loss-making bank that is basically on a life-support system because of the generosity of British taxpayers shouldn't be dishing out ever larger amounts of money in pay and bonuses.

"The overall amount has been coming down. It needs to continue to come down. They are entitled to pay their staff what they want when they are standing on their own two feet. At the moment they are not."

Mr McEwan warned there would be job losses because of plans to slash the number of divisions and make savings under a swingeing cost-cutting drive, which will see £1 billion of savings this year alone and £5 billion overall by 2017. But he said it was too early to give details on the impact on its workforce.

Mr McEwan admitted the group was the "least trusted bank in the least trusted marketplace", but said the turnaround was designed to turn its reputation around. It will axe teaser rates that lure in new customers and offer the same deals to both new and existing customers, while also rolling out a team of business banking representatives in branches on the high street as part of its overhaul. But the bank's bonus pool has stoked controversy 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 in order to profit from their property assets.

Mr McEwan defended the bonus handouts, 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."