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UKT: RBS bankers resign over forced bonus cuts

Two of Royal Bank of Scotland's most senior bankers have resigned amid frustration over the state-backed lender's bonus policy, raising fears about the Government's chances of selling off its stake at a profit.

By Jonathan Sibun, Assistant City Editor
Published: 12:01AM GMT 15 Feb 2010

Steve Ashley, who heads up RBS's lucrative rates trading division, and Chris Fleming, a senior salesman, quit the bank on Friday last week in a move that shocked RBS investment banking staff. The trading business is believed to have been one of RBS's most profitable divisions in 2009.

Mr Ashley and Mr Fleming are thought to have been offered jobs elsewhere but their decision to leave is believed to stem, at least in part, from dissatisfaction that RBS is being forced to scale back bonuses in the wake of the taxpayer-funded bailout of the bank.

One trader at RBS said: "This is a disaster. The Government has got to make a decision – either it ignores the noise around bonuses, lets the bank pay up and ultimately generates a return for the taxpayer or it stamps down, our best people leave and the taxpayer loses out."

Stephen Hester, RBS's chief executive, has warned of an exodus of talent if RBS is forced to scale back bonuses too aggressively. Last month he told the Treasury Select Committee that RBS is a "prisoner of the market" as he described the bank's policy as paying "the minimum we can get away with".

"Shareholders have raised concerns about our ability to keep and motivate good people," he said, calling staffing his "single greatest problem".

His comments echo those of John Kingman, the outgoing chief executive of UKFI, who told the committee in November that the Government was "walking a tightrope" on bank bonuses.

Mr Kingman warned: "We cannot afford to be in a position where the banks lose so many people that we start to lose serious value."

RBS is still finalising the size of its bonus pool, likely to be around £1.5bn, but Mr Ashley would have a good idea of its likely size. Bonuses will be announced later this month.

One source said: "By the time bonuses are paid it will be 27 months since bankers last received a payout. Cash bonuses were paid in March 2008 and they were only paid in subordinated debt last year. That's a long time to wait."

RBS's bonuses this year will be paid two-thirds in deferred shares. Mr Ashley and Mr Fleming are likely to have been offered guaranteed bonuses and a buyout of their RBS compensation schemes to move. An RBS spokesman confirmed the resignations.

Gordon Brown, the prime minister, pledged yesterday that "every last penny of taxpayer support to British banks is paid back". The Government owns more than 80pc of RBS.

"I'm sure you share my anger with some of the banks," Brown said. "It is only fair that those who have contributed to the recession and have now benefited from taxpayers' support give something to society in return."

News of the departures comes as Lloyds Banking Group has played down reports that chief executive Eric Daniels is in line for a bonus of £10m. "No decisions have been taken," a spokesman said. Mr Daniels' potential maximum compensation for 2009 is just over £6m.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7237971/RBS-bankers-resign-over-forced-bonus-cuts.html

COMMENTS:

Tumby
on February 15, 2010
at 11:11 PM

As Wheaty and David have already mentioned Steve Ashley is a highly successful trader who has run a trading business that has consistently made substantial profits for RBS. He has only delivered exceptional results through all market conditions so why so much vitriol? For those who say his talent is easily replaceable i suspect they have no idea what is involved, they think its just gambling with someone elses money, how hard can that be? Well there are thousands of exceptionally clever people all over the globe trying to find a way to make money from the markets. If you ask those professional traders how easy it is you will get a clear message, its a tough never ending battle. Thats just the pure trading aspect of the job. Someone like Steve Ashley ran a big business, his role is as much about developing the business, providing liquidity to RBS's clients, hiring talent and training/nurturing that talent. These are not easy things to do and the few who make it to the top are genuine stars.
Without people like this RBS is only worth whats on its balance sheet, and thats not a lot. Its a people business something the public and the government dont understand.

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John Stobart
on February 15, 2010
at 09:05 PM

Oh diddums. Toys out of the pram time, is it? Never you mind little diddums. Just go now please and close the door after you.

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victorireland
on February 15, 2010
at 09:01 PM

Is this company so stupid as to believe it will suffer adversely by these resignations. Only egos swelled as this business got too big and planned obfuscation the soporific delusion of choice. Goodbye guys and, Oh! ..... leave your ill gotten "benefits"on the way out!

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Clair
on February 15, 2010
at 07:43 PM

Good let them walk. Nobody is irreplaceable. Their 'expertise' is risible anyway. Hopefully it's the first of many. There is plenty of young blood eager to move up the ranks - let them have their turn. They can't do a worse job than the last lot. Good riddance.

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Captain R.E. Jones (retd.)
on February 15, 2010
at 06:33 PM

What's the problem? You've got to pay for talent whether in art, literature, law, banking or whatever. We need these rates trading and sales guys to continue their magic and roll in the big bucks for us, the taxpayers who are the new shareholders in RBS.

Has anyone considered: the talent we've just lost may be in fact irreplaceable?

We must stop all these tantrums about banking losses: they achieve nothing. Pay these guys what they want, and let them get on with it. These human assets are more valuable than the junk you'll find on the RBS balance sheet.

Smell the coffee: these talented chaps may be our last hope
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The Watcher of Bath
on February 15, 2010
at 05:16 PM

Sounds just like the Coliseum in the days of my youth. All the sweaty proles, up in the gods, throwing their stinking nightcaps in the air and baying for yet more blood.
Can we have a little bit of balance, please.
These two guys are, apparently, at the top of that part of RBS that is, hopefully, going to generate the profit that will pay back the "loan" from the private sector tax payer.
If RBS doesn't make a profit the private sector tax payers aren't going to see their contribution repaid to the government (for the government to squander on the Public Sector). All the private sector tax payers are going to see is their bail out money vanish without trace. Public Sector tax payers obviously contributed nothing, therefore lose nothing, other than the Public Sector jobs that are paid for by the taxes on bank profits. I think Gordon is a moron but I have to admit that he can wind you lot up wonderfully and quickly divert any blame from himself for our present mess. One of the best scape goat hunters around, our Gordon.

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Big Dog
on February 15, 2010
at 04:27 PM

You idiots claiming banks create nothing and expect everything. I'm not even a banker, my qualification for this post is merely that I am not retarded.

Jump on the "bankers have ruined my (useless) life" bandwagon all you like but you can't even begin to imagine the complexities of keeping 6 billion people's finances organised whilst generating a useful return and satisfying the "want now, pay later" culture that has become prevalent in the West.

There is an argument that dictates those below average intelligence should not be allowed to vote. I agree with that, it should extend to posting on the internet as well.

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Beefbeefbeef
on February 15, 2010
at 04:26 PM

There seems be a belief that anyone could do their job. If that was the case, the laws of supply and demand would mean everyone would apply to get into banking, driving down their remuneration towards the minimum wage over a period of years. That hasn't happened. I suspect that is because these people are pretty capable.

Pay them the going rate. It's the only way we'll get our money back.

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tony adair
on February 15, 2010
at 04:20 PM

So don't cut bonuses- TAX them punitively across the board; that way the greedy fat cats will have nowhere to run.

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Stuart
on February 15, 2010
at 04:14 PM

I whole heartedly agree with Rod (Rod on February 15, 2010 at 12:18 PM)
I worked for the RBS Group for 20-years lent money in a measured and prudent fashion as did most of colleagues.

As memory serves, the Blair/Brown Partnership extolled the virtues of the Banks only a few months ago when they were benefiting for the millions of pounds of Corporation tax that these institutions generated. Now it’s easy to blame Banks for the dismal state of the UK – just remind me, who was the Chancellor and Prime Minster during this farce??

I totally agree with Gordon Browns comments ………"It is only fair that those who have contributed to the recession and have now benefited from taxpayers' support give something to society in return.".

I also agreed with Gordon when at the height of the Fred Goodwin pension debate, he stated something along the lines that no one should benefit from a pension when they have overseen the company collapse.

No doubt his letter of resignation will be forthcoming along with his agreement not to draw his tax payers funded pension.

My ex-colleagues at RBS are being made to jump through politically motivated hoops which look good for the ‘media’ yet generate little revenue and waste the talents of those involved.

I fully acknowledge that without the Government bailout the RBS and other Banks would cease to exist, yet Government has shown it’s inability to run the countries finances, therefore how can we believe that they can run a commercial enterprise.

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