Revealed, ‘shameless’ RBS dishes out £5bn of bonuses
‘Rewards for failure’ branded a slap in face for taxpayer
THE Royal Bank of Scotland has paid its top staff bonuses worth £5 billion in the decade since it was bailed out by the taxpayer.
As the tenth anniversary approaches of the £45.5 billion bailout that saved the bank from ruin, new analysis reveals the breathtaking scale of payments made to RBS bosses.
The bank, which had burgeoned into the biggest in the world under chief executive Fred Goodwin, came within hours of collapse at the beginning of October 2008 – threatening the stability of the entire UK economy.
The failing RBS was rescued when the Government brought it into public ownership as part of the largest corporate bailout in British history. Since then, RBS has made billions of pounds in annual losses, closed hundreds of branches across the UK and axed more than 30,000 employees. Yet over the same period, The Scottish Mail on Sunday can reveal bank staff have been handed performance bonuses totalling £5 billion.
Last night politicians, campaigners and unions accused RBS of ‘unfairly rewarding its staff for failure’ and said such ‘colossal bonuses’ were a ‘slap in the face’ for hardworking taxpayers who funded the bailout and for those who lost money during the crash. Meanwhile:
Senior figures warned that taxpayers may never see a return on their investment;
The head of the Treasury Select Committee said the bank’s untrusting culture still exists, a decade on;
The bank admitted it still had a lot of work to do on regaining public trust.
Ten years ago, RBS was the most successful bank in the world, with operations in more than 50 countries and 200,000 dedicated employees. But after a consortium led by RBS took over Dutch bank ABN Amro in 2007 for £49 billion, overstretched RBS was driven to the brink of collapse.
Between October 2008 and December 2009, the Government had to pour £45.5 billion into the bank to save it, and became the majority shareholder with more than an 80 per cent stake.
Since then it has reduced its ownership to 62 per cent by selling some of its shares to the private sector – at a loss so far of £3.2 billion to the taxpayer.
Yet accounts show that between 2010 and 2017, RBS paid its staff £4.9 billion in bonus payments, handed out in the form of shares, deferred bonuses and lump sum payments.
Last night, Steve Middleton of BankConfidential, an organisation for whistleblowers who expose practices at big banks, said: ‘It is disgraceful that so many people – many of whom we believe should have faced criminal investigations – are being paid bonuses from the public purse.
‘It proves RBS hasn’t changed at all in ten years – it is still shamelessly rewarding staff for failure,
in colossal amounts, and it is completely unfair and a slap in the face to those who bailed it out and to those who were mistreated by it.’
Scottish Conservative finance spokesman Murdo Fraser said: ‘There was an assumption that the reckless spending of the past would be stopped.
‘Employees should be encouraged and rewarded, but these bonuses seem to have got completely out of hand. If RBS wants to retain the goodwill of the Scottish public in terms of the bailout, then it has to do better than this.’
In contrast to the ‘performance’ bonuses, a recent report by the Competition and Markets Authority found fewer that half of RBS clients would recommend its customer service to friends and family, while it ranked joint bottom of the personal banking league table.
In the decade since the bailout, RBS has made thousands redundant, with many jobs ‘off-shored’ to workers in India, who can receive as little as £1.19 an hour.
At the same time the bank closed 1,909 branches, leaving only 369, with a further 54 set to shut in January 2019 in England and Wales. There are now only 89 branches in Scotland. Rob MacGregor, national officer of the Unite union, said: ‘RBS is still as toxic as it was during the financial crisis.
‘When the current chief executive Ross McEwan took over, his mission statement said he wanted to make the bank number one for customer service and trust, and by any independent measure, that mission has failed miserably.
‘They’ve badly let down their customers, staff and the British taxpayers and ten years on it is time for reflection. And the big question is, what has really changed?’
Last year the bank made its first profit, of £752 million, following a £7 billion loss in 2016.
But Nicky Morgan, the MP chairing the Treasury Select Committee, believes that despite the ‘hard work’ RBS has put in, it is unlikely British taxpayers will get their money back.
She told The Scottish Mail on Sunday: ‘Unlike other banks, which have made a big effort to change their culture... people are unconvinced that that process has happened at RBS. And that is why people are still so unhappy.’
John O’Connell of the TaxPayers’ Alliance said: ‘Taxpayers are rightly still angry at how much they had to pay out to RBS ten years ago. They’ll be even angrier that their taxes have propped up big bonuses.’
An RBS spokesman last night confirmed the scale of bonus payments but said: ‘The total bonus pool has shrunk by more than 75 per cent since the crisis.’
FALL FROM GRACE: Fred ‘The Shred’ Goodwin, pictured right at the wheel of his rare 1988 BMW, leaving home in Edinburgh last Thursday