State-owned RBS loses £5.1bn but STILL pays bankers £607m in bonuses

Scandal-hit Royal Bank of Scotland has revealed bonuses of £607million will be paid to staff despite losses of £5.2 billion in 2012.

Chief executive Stephen Hester will receive a bonus worth £780,000 in shares. It is the first time in four years that he has taken a bonus.
 
The bank has now lost £34billion since it received a £45.5billion government bailout in 2008.

Hester told BBC Radio Scotland's ‘Good Morning Scotland’ programme: “Other people decided to award it [£780,000 in shares] to me. As you know it's the only bonus in four years I have taken.

"By the standards of other people doing this job that is something that the board clearly felt was merited."

After the losses and scandals of the past year as well as hundreds of millions in bonuses going to staff, Sir Philip Hampton, chairman of the 81% public-owned bank, told ITV's Daybreak the situation was "toxic for everybody".

Sir Philip admitted bonus levels were "tough to swallow" for the public, but that levels are falling "slowly but surely".

Losses at RBS increased to £5.1 billion in 2012 from £1.2billion the year before, in part as a result of its £390 million settlement for Libor rate fixing and setting aside another £1.1 billion in provisions to cover mis-selling claims.

Chief executive Hester said this would be the last year under a "wrenching" restructuring and hopes the bank will be "clean" and ready to return to the private sector next year.

But he added that the core bank was "much closer now to being in the good financial health that would allow shareholders to receive a dividend and the Government to start to sell its stake".

Underlying group operating profits rose from £1.8 billion in 2011 to £3.5 billion in 2012, showing the core business is closer to returning to financial strength.

RBS added that it was recouping £302 million for its Libor settlement by cutting the 2012 bonus pot, clawing back from previous years and reducing current year awards.

"The bonus rates have been falling very substantially. Our bonuses now in our markets business, where all the big bonuses are, are 25%, a quarter of what they were four or five years ago," Sir Philip said.

He added that bonuses were "still huge", but said "it is a very difficult, competitive marketplace, and if you don't pay what you need to pay you don't get the best people".

Hester said 2012 was "a chastening year" after its Libor settlement, mis-selling scandals and an IT meltdown in the summer, which left millions of people without access to their bank accounts.

He added: "We are determined to overcome the cultural and reputational baggage of pre-crisis times with the same focus we have applied to the financial clean-up from that era."

Hester said there would be further job losses in its markets division this year as it continues to shrink the investment banking division.

"There are messes still to clean up. I know we had quite a few last year, but they were the product of huge success in winding down the risk of this bank," he added.