Bank loses 3.6bn but finds 1.3bn to compensate bonuses

Katherine Griffiths, Banking Editor & , : {}

More than 100 bankers at Royal Bank of Scotland will take home bonuses of at slightest �1 million even though RBS, 84 per cent-owned by the taxpayer, done a �3.6 billion loss last year.

At slightest dual employees in RBSs investment bank will embrace about �7 million each, the bank suggested yesterday as it reported a near-doubling of bad debts to �13.9 billion in 2009.

Sir Philip Hampton, RBSs chairman, pronounced that environment compensate had acted a dilemma, as the dignified citation of the bank, being deeply loss-making and relying on supervision handouts, contrasted with the realities of using the business.

RBS reliable it would compensate �1.3 billion in bonuses to 16,800 investment bankers, on normal �77,000 each.

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The payouts were pounded by the Conservatives and Liberal Democrats. But Sir Philip pronounced that in environment the bonuses, the bank had attempted to set upon a change in between recognising a overwhelming year for RBSs investment promissory note business, contributing �5.7 billion in handling profits, and the order to compensate the smallest required to keep and be the cause of staff.

Compensation as a commission of income for RBSs investment bankers came in at twenty-seven per cent, the lowest in the industry and in contrariety with 38 per cent at Barclays. Bankers in RBSs branches, and alternative functions outward the investment bank, will share a �375 million reward pool, giving them on normal �2,600.

Under the agreement with the Government, RBS is profitable income bonuses, of �2,000, usually to employees on less than �39,000. Everyone else will embrace their bonuses in stock, with the initial tranche vesting in June. Most bonuses will vest over 3 years but the banks 250 majority comparison staff have concluded to widespread their payments over five years.

RBS reported that 2009 was an additional difficult year, with Ulster, the Irish operation, the word multiplication and Citizens, the American business, all struggling. But the banks jot down �24.3 billion loss in 2008, driven by write-offs on the ABN Amro purchase, narrowed dramatically to �3.6 billion.

The bank pronounced it had depressed short of the supervision aim of lending �16 billion to businesses, but Stephen Hester, arch executive, insisted it was complying with the lending commitments in suggestion since it had done credit available. The problem, he said, was that businesses were shaken about the frail state of the economy and were profitable behind as fast as we can trowel loans out the door.

Profits in the core business, the activities that will form the bedrock of the banks recovery, roughly doubled to �8.3 billion. RBSs shares rose 2.25p to 38.8p.

Meanwhile, there are indeterminate signs that bad debts have peaked, Mr Hester said. RBSs not really tasteful story will turn simpler and some-more attractive, he predicted.

But this year will yet be a tough slog, with copiousness of wretchedness still to come, Mr Hester added. The bank would time up an additional loss in 2010, he said.

RBSs non-core business, done up especially of abroad groups that are being wound down or sold, done a �14.6 billion loss in 2009. Estimates of the sum costs to RBS of circuitous up the non-core multiplication is probably a series you wouldnt wish to hear, Mr Hester said.

The bank entered �282 billion of resources from both the non-core and core groups in to the Governments hulk word scheme, that put a building underneath the intensity waste at RBS and increased the core collateral comparative measure to eleven per cent.

After a restructuring of the word intrigue that done it some-more costly to stick on but simpler to get out early Mr Hester pronounced that the bank might be means to theatre an exit in 2012 or 2013. Some analysts envision it will be means to lift income from investors progressing than that, permitting it to shun from the item insurance intrigue inside of the subsequent integrate of years.