1,000 bankers quit RBS after bonus bust-up
MORE than 1,000 of Royal Bank of Scotland’s top bankers have defected after the increasingly bitter row over bonuses at the group, City PM can confirm, fuelling fears that the clampdown on remuneration will damage its chances of being able to deliver value to shareholders in the future.
Although a healthy staff turnover is usual at the bank in any given period, this year has seen a more rapid rate of defections as employees at the investment bank eschew RBS’s remuneration problems for larger bonuses and better salaries at its rivals.
The news comes after RBS chief executive Stephen Hester warned the bank is “walking a tightrope” between submitting to government demands on bonuses and retaining its top staff, a key factor in its ability to return a profit in the future.
Those who have already left are estimated to have contributed around eight per cent of the bank’s income in 2008, with the threat of more resignations likely if RBS is unable to maintain a competitive level of pay at the end of the year.
The government – whose stake will soon rise to 84 per cent after its involvement in the asset protection scheme (APS) is finalised – has already announced restrictions on bonuses at the group, with cash payouts limited to those earning under £39,000 a year and the rest paid in deferred shares.
Bonus anger was also ignited over the weekend by analyst predictions that the annual remuneration haul at investment bank Goldman Sachs will hit $19bn (£11.6bn) despite the global economic turmoil, out of a predicted net income figure of $45bn.