Bailed-out banks' bonuses put pressure on Britain's George Osborne

Payments to RBS and Lloyds executives inflame row over City pay

PUBLISHED : Sunday, 09 March, 2014, 6:22am
UPDATED : Sunday, 09 March, 2014, 6:22am


British finance minister George Osborne is facing calls to explain bonus payouts worth around £35 million (HK$454 million) that have been handed out by the bailed-out Royal Bank of Scotland and Lloyds Banking Group.

The scale of the rewards - including £3 million in shares to the new RBS chief, Ross McEwan - were announced to the London stock exchange as it emerged the European Commission is considering a new clampdown on boardroom pay.

If implemented, it would require firms to disclose a ratio for the gap between executive pay and that of an average employee.

The disclosures by Lloyds and RBS - which has reported losses totalling more than the £45 billion of rescue funds pumped in by British taxpayers in 2008 - have further inflamed the row over City of London pay.

Rob MacGregor, of Britain's biggest trade union, Unite, said: "George Osborne needs to ... explain why he is failing to rein in the excesses of the City and turning a blind eye to the bonus bonanza in state-backed banks."

The 11 members of RBS' executive committee, including McEwan, have cashed in long-term bonus plans and been awarded new payouts potentially worth more than £23 million.

Lloyds, which is 31 per cent owned by the taxpayer, has handed out more than £12 million in share bonuses - granted in previous years but due to be paid out now - while the head of its retail bank, Alison Brittain, has cashed in a near £1 million buyout award, which she was handed as an incentive to join the bank two years ago.

Unlike RBS, Lloyds - which made a small profit of £415 million in 2013 - did not make any announcement about new bonuses awarded for 2013.

The latest pay disclosures come amid expectations that the industry will soon face scrutiny of the way it treats small-business customers. The banks could face a full competition inquiry after the Office of Fair Trading completes its preliminary study later this month.

While the new RBS chief had called on his so-called executive committee to waive their annual bonuses for 2013 because of the £8.2 billion of losses reported recently, the three newest members have still been awarded bonuses. Rory Cullinan, head of RBS' new "bad bank", received £2.5 million in shares. Alison Rose, promoted to run the commercial and private bank, took just under £900,000 and Donald Workman, who runs the Asian businesses, £460,000.

Those three are part of the 11-strong management team - which includes McEwan - that was also awarded almost £14 million in shares through a long-term incentive plan due to pay out in three years, depending on performance.

McEwan waived his annual bonus when promoted to replace Stephen Hester but has now been awarded almost £3 million in shares through the plan.