RBS chief admits bonuses will be paid this year

The Royal Bank of Scotland today posted a pre-tax loss of £2.2bn for the July to September period. It has also written off another £3.3bn in bad debts and other bad investments. It says conditions remain ‘ fragile’. Yet Stephen Hester still expects to pay some bonuses – as he will tell reporter John Sparks on Channel 4 News tonight at 7pm.

It seems that Stephen Hester has bowed to pressure and will still pay some bonuses. (This follows the news earlier this week that City headhunters have been inundated with CVs from RBS bankers disgusted with the announcement that there would be no cash bonuses for 2009).

Here’s a heads up on tonight’s interview:

John Sparks: John Kingman described the way RBS was run under Sir Fred Goodwin as a disaster. Would you agree with that?
Stephen Hester: My job is to look forward, to rebuild RBS and to get the tax payers money back. We have an enormous restructuring programme, probably the biggest restructuring programme in the history of the world to do and we have a legacy of difficult things to work out of. I believe we can do that and I do believe the tax payer will get out at a profit if we’re now left to get on with the job.

JS: Are you attracting the people that you want? What about the salesmen, the modellers? They’re key to your bottom line aren’t they?
SH: We have lost more people than we have gained in those key areas this year. That’s one of the things we’re very focused on. It’s damaging to us and we want to try to arrest that damage.

JS: I’ve been told that RBS has been paying guaranteed bonuses this year to attract top talent. Is that true?
b All of the packages that we have offered this year to the staff that we’ve recruited are deferred with claw-back paid in shares. There are some cases where those packages are a guaranteed amount provided that the performance justifies that guarantee. If it doesn’t then we have the ability to take it away again if there are subsequent losses arising from that person.

JS: So there are guaranteed bonus payments being made in a few cases?
SH: Yes.

JS: With the provision of claw-back
SH: That is correct.

JS: That would worry some people
SH: That’s the point of claw-back. We have led the world in reforming pay to remove any chance of perverse incentives. I believe that we are in complete compliance with the FSA rules and indeed we’ve led the world on them.

JS: Will RBS need additional tax payer support in the future?
SH: We don’t think so… Nothing in life is certain but we are confident that RBS will not need additional tax payer support.

JS: It would be a disaster if it did.
SH: I agree.