By Mandy Thomson
RBS have revealed a bonus pot of £607m despite their overall performance resulting in a £5.2bn pre-tax loss. The publicly owned company faces criticism after their loss means they cannot repay taxpayers after the government bailed them out in 2008 – they now own 81%.
Their losses come from massive liabilities, which wiped out the £3.46bn operational profit that the bank made this year, which is almost double their profit last year of £1.82bn, and their highest yet since their downfall in 2008.
A £390bn settlement for Libor rate fixing, which happened earlier this year, and a £450m charge in the last quarter to cover mis-selling PPI in previous years have left them in a worse position than last year’s loss of £1.2bn.
Sir Philip Hampton, chairman of the part public-owned bank described the bonus situation as ‘toxic for everybody’ when asked why RBS can afford to pay bonuses to its staff but not pay anything towards what the public spent in bailing it out.
He said: “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.”
Fraser Thomson, Managing Director of financial services firm Professional Partners, said: “RBS is making an operational profit and is doing all it can to reduce balance sheet debt. However it remains burdened by liabilities from previous activities and we can only hope that if they have a period of no further liabilities the bank will improve its position and increase shareholder value. The bank must of course make more inroads to their activities and ensure that they reduce risk to the business but there is strong evidence they are doing this.
Alistair Grant, Chartered Accountant for Wylie and Bisset, Glasgow, said: “We believe that RBS will turn the corner and see no issues with the bank continuing to be viable. They performed better than they did last year, and without their liabilities they would have been in a good position.”
Sir Philip said bonus levels were “tough to swallow” for the public, but that levels are falling ‘slowly but surely’.
He said RBS was trying to rebuild customer service and confidence, but that it couldn’t be done overnight.
*Libor means the standard rate of interest for loans between financial institutions