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Taxpayers’ bank RBS pays two execs £10m
Kevin Widdop13 Aug 2009
Fury grew today over new rules aimed at controlling City bonuses as it emerged that Royal Bank of Scotland, which is controlled by the taxpayer, has spent more than £10m hiring two executives from rival banks.
RBS, which is 70 per cent owned by the Treasury, has given a £7m one-year guaranteed pay and bonus package to Antonio Polverino, who it recruited from investment bank Merrill Lynch.
Bruce Van Saun, who was revealed as RBS's new finance director last week, is likely to earn several million pounds in pay and bonuses when he starts next month. He collected £10.5m when he left Bank of New York Mellon a year ago and his last full-year pay cheque was for £5.4m. RBS said it would not comment on individuals' contracts.
The revelations come the day after the City watchdog was accused of watering down its new rules on bankers' pay and bonuses. Politicians said the Financial Services Authority had caved in to lobbying from banks.
Critics said it turned what was to be a rule on bonuses being paid out over a three-year period into guidance, and gave approval for banks to pay bonuses even if they made a loss.
The Treasury made it clear that it was unhappy with the FSA's plans.
City Minister Lord Myners said: “The short-term bonus culture in the global banking industry must end.
“The Government is pursuing all options to ensure banks can no longer get away with risky pay and bonus policies that contributed to the crisis.”
Reader views (7)
A management consultant once said that there is a 'limit to how much you can pay people.' This bank, owned by the taxpayer, should take note of that advice. Any government which can sanction such an award deserves to be voted out of office at the next election
- Mark, Venice, Italy, 13/08/2009 23:13
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The guaranteed bonuses is paid to compensate for the loss of the bonus that would have been earned if Polverino had remained at Merrill Lynch. If Polverino had had a successful start to 2009, he would be expecting to be paid based on that revenue and the revenue earned throughout the rest of the year.
If he had left Merrill then spent 3 months or so out of work (notice period) and then have to start with a zero P&L balance at RBS when he started, with a bonus paid based on revenues earned from that start date onwards (not guaranteed), he would have been unlikely to join RBS.
The argument is that if RBS does not pay market rate for top banking talent, all it's decent revenue earners will leave and it will be left with dross which will never pay back its debt to the taxpayer. RBS's bosses have a decision to make, either they pay below market rate and employ sub standard bankers or pay market rate and the bank's fortunes turn.
Not all bankers lost money in 2008 or 2009, some areas of the business have made record revenues. RBS needs to stump up the cash to hire bankers in areas which are making money.
- Headhunter, London, 13/08/2009 17:18
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As the main shareholder in RBS, does the TAXPAYER not have a deciding vote on the Board of RBS when the subject of bonuses comes up? If not the case, then the Government has made another hash of things.
- Colin Macpherson, Gramat France, 13/08/2009 17:18
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I supspect that the Government will allow any pay or bonuses that allow it to sell off the banks before the next election. Thereafter high earners will be taxed to the hilt, so their bonuses mean nothing.
- Francis Salvesen, London UK, 13/08/2009 17:02
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And how arrogant he looks
- David Stephens, London, 13/08/2009 16:58
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RBS are simply shocking. They will resort to anything to get themselves out of this hole, including paying ridiculous amounts of money for an employee or something they dont even have a guarantee over - its what they have done for years.
It makes me sick to read about their bumper salaries and payaouts, this surely cannot be allowed to continue can it?
- Ancient Wisdom, London, 13/08/2009 15:58
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Can someone explain to me exactly how you have a "guaranteed" bonus is? Bonuses as I understand them are based on company and personal performance, if neither performs well then there is no bonus. If these guys were to sit around doing nothing all day and RBS were collapse and be nationalised then they would still be entitled to a bonus, how exactly does that work?
- Bob, Cheam, 13/08/2009 13:25
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