News Tristan on 06 Feb 2009 01:23 pm
RBS To Pay Out Millions In Bonuses Despite Govt Bailout
I read on The Times Online yesterday that RBS, the failed bank that owns Natwest and ABN-Amro is set to pay out millions of pounds in bonuses to its staff. At first I was rather annoyed that the bank would have the audacity to do this despite the fact they were bailed-out with taxpayers money and are still on handouts to from the Bank of England to help prop up it’s trading activities.
However, having read the article all the way through, and watched the video posted with the article, I am a bit more understanding. It seems the vast majority of the bonuses will be paid out to staff who are contractually obliged to receive a bonus should their activities have turned a profit.
In the case of RBS, their foreign exchange, bonds and commodities traders all had a good 2008, so it is only fair that they receive a bonus as a share of the profits they have generated.
The insurance side of RBS - better known as Direct Line - which had a record year in 2008 are also set to pay out bonuses to their staff, and this I’m fine with as it is performance related.
The staff that I don’t think should receive a bonus for are the staff that were involved in mortgages and derivatives of mortgages which contributed to the bank’s losses (reportedly in the region of £7 - £8bn) in 2008. These staff should receive no bonus as they have not generated any profits in my opinion.
There is also talk of the regular branch staff not receiving their usual 10% bonus that they get in March. I suspect that this has become the norm because over the past decade, the norm has been that RBS makes lots of profits, and thus shares some of those profits with it’s workers. If the bank doesn’t make a profit, like in 2008, then the workers shouldn’t receive a bonus - simple as that.
