RBS seeks to pay cash bonuses

The Pak Banker - - Company& -

LONDON: Royal Bank of Scot­land (RBS) Group PLC is in talks with U.K. Fi­nan­cial In­vest­ments Ltd. to al­low the U.K. bank to award cash bonuses to em­ploy­ees for 2010, but cap it at £50,000, a per­son fa­mil­iar with the sit­u­a­tion said Mon­day. The UKFI is the govern­ment arm that man­ages an 83% stake in RBS and 41% stake in peer Lloyds Bank­ing Group PLC. It has to ap­prove the bonus pool for RBS, which re­quired the largest state bailout in the world fol­low­ing its near col­lapse dur­ing the fi­nan­cial cri­sis in 2008. RBS didn't dis­trib­ute any cash bonuses last year.

Talks be­tween the govern­ment and the bank are pre­lim­i­nary, since there are still days be­fore the fi­nan­cial cal­en­dar year ends. RBS's board also hasn't held for­mal talks about 2010 bonus. By giv­ing some a cash pay­out, the bank hopes to be able to con­vince em­ploy­ees to stay and not be poached by com­peti­tors. The push comes as the U.K. govern­ment and bank ex­ec­u­tives meet later this week to dis­cuss com­pen­sa­tion and lend­ing poli­cies. The U.K. govern­ment busi­ness sec­re­tary Vince Cable said over the week­end that he hopes the banks will show "real re­straint" dur­ing the up­com­ing bonus sea­son. He re­it­er­ated that if they don't act re­spon­si­bly, the govern­ment could im­pose some ad­di­tional form of tax­a­tion on them. The govern­ment has al­ready in­tro­duced a £2.5 bil­lion a year bank levy but has re­peat­edly warned it could take fur­ther ac­tion if nec­es­sary. On Fri­day, the U.K. reg­u­la­tor is­sued tougher guide­lines on com­pen­sa­tion for the fi­nan­cial ser­vices in­dus­try, in­clud­ing lim­it­ing the amount of cash bonuses to a max­i­mum 50% of any pay­out awarded. Half of that must also be de­ferred. Lawyers and ac­coun­tants say the rules could re­sult in some em­ploy­ees pay­ing more in tax than they re­ceive in cash, since tax in most in­stances will be levied on the cur­rent value of the full pay­out, even though much of the cash and shares won't vest for years. -PB News

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.