$1.47 billion bank bonus prompts UK outrage

LONDON (Reuters) – Reports that the Royal Bank of Scotland (RBS) was about to award its staff a billion pounds in bonuses prompted outrage in Britain on Sunday at a time of soaring unemployment and with a deep recession looming.British finance minister Alistair Darling vowed that bankers who had lost money would not get big cash bonuses, though he said it was too early to follow U.S. President Barack Obama’s lead and put a mandatory cap on bankers’ pay.

The European Commission has already urged national governments to cap bank pay, and opposition politicians said Darling’s decision to launch a review into banks’ management and remuneration was too late to stop a wave of hefty bonuses.

The Sunday Telegraph newspaper reported that RBS plans to pay out nearly a billion pounds ($1.47 billion) in bonuses this year, even though it has just posted the biggest-ever financial loss for a British company.

RBS required a 20-billion-pound government bail-out to stay afloat last year and is now nearly 70-percent state-owned.

Speaking on a BBC chatshow, Darling said he had discussed this with RBS chief executive Stephen Hester.

“He agrees that no one who is associated with these large losses should be allowed to walk away with large cash bonuses,” Darling said.

The Sunday Telegraph said that to appease the government, the cash element of RBS’s bonuses would be limited to 25,000 pounds — though other payments could be made in shares and stock options.

RBS’s planned bonuses are 60 percent lower than a year ago, and the bank believed it was contractually obliged to pay many of the bonuses to staff it had acquired in its 2007 takeover of Dutch bank ABN AMRO, the newspaper said.

RBS said no final decision had been reached on bonuses.

PUBLIC PRESSURE

Opposition Conservative finance spokesman George Osborne said that examples such as RBS strengthened the case for mandatory caps on bankers’ pay, though he stopped short of calling for this outright.

“If the banks are proceeding on the course that they apparently are proceeding on, then I think we should actively look at a cap,” he told the BBC.

Darling, writing in the Sunday Telegraph, said he plans an independent review of banks’ management and bonus structure.

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