Friday, 14 August 2009

Fresh bonuses row as 'rain-maker' pair paid £10m by RBS

Published Date: 14 August 2009
By David Maddox

THE Royal Bank of Scotland has been accused of failing to learn the lessons from the recent banking crisis after it reportedly agreed to pay £10 million to attract two new bankers.
The poaching of Antonio Polverino from Merrill Lynch on a one-year deal and the hiring of Bruce Van Saun as financial director has raised concerns that big bonus culture is not dead.

RBS, which is 70 per cent owned by the taxpayer, has refused to confirm reports that Mr Polverino had been brought in for £7m.

But it said that the basic salary of Mr Van Saun will be less than the £829,000 earned by Guy Whittaker, his predecessor as finance director.

However, it is understood that, through bonuses, Mr Van Saun will earn a similar package to the £5.4m he received at the Bank of New York.

Privately, the bank and the UK government justify the high bonus "golden hellos" by claiming that the two new recruits are "rain-makers" in the industry.

This means that the pair wield such enormous influence they can make a massive impact on the struggling bank and even change the climate of the industry itself.

The news follows a row over RBS chief executive Stephen Hester's pay. After bonuses, Mr Hester is in line to receive up to £10m for 2009 if he can push RBS's share price to above 70p.

SNP MSP Rob Gibson, a member of the Scottish Parliament's economy, energy and tourism committee, accused RBS of using taxpayers' money to fund "fat cat" salaries.

"It is because of this sort of behaviour, by what are now effectively publicly owned banks, that I and my colleagues support a full and frank inquiry into the banking industry," he said.

"Recently, Gordon Brown said he would not reward failure and with billions of pounds worth of public money in many of the banks, these bonuses will be paid for by the taxpayer.

"A taxpayer which will become increasingly angered that they are paying for people to become instant millionaires."

There have also been concerns raised by shareholder groups.

But Roger Lawson, of the UK Shareholders Association, said that he was still most concerned about the deal worked out for Mr Hester.

A spokesman for RBS insisted the bank would not discuss specific pay deals for individuals.

"We reserve the right to use the tools we need to attract and retain the best," he said.

"Our core reward principles are that there are no rewards for failure and that our approach on deferral and clawback protect the long-term interests of shareholders."

The row comes amid news that RBS is consolidating four London offices in a new 378,000 sq ft premises at Bankside. They are Old Broad Street, New Broad Street, Waterhouse Square and Sampson House.

A total of 2,500 staff are currently in the new premises, with this increasing to 4,000 over the next six months to a year.

Employees based there are in the global banking and markets business, retail banking and IT.

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