RBS boss Stephen Hester rejects £1m bonus

Royal Bank of Scotland chief executive Stephen Hester is to waive his £1m bonus, Sky sources say.

It comes just hours after the Labour Party said it would force a House of Commons vote calling for Mr Hester to be stripped of his bonus.

Mr Hester had been facing mounting pressure to follow the bank's chairman, Sir Philip Hampton, and waive his bonus.

Royal Bank of Scotland chief executive Stephen Hester is to waive his £1m bonus

Sky News' City editor Mark Kleinman said: "Stephen Hester has decided, after days of mounting criticism about his million-pound bonus award, to relinquish that bonus.

"He has decided to waive it and he will not accept the 3.6 million shares that he was granted by the board of directors."

"The political pressure on Mr Hester has been growing for several days.

"The Labour Party called for a vote in the Commons on the issue and Mr Hester is said by friends of his to be deeply concerned by the fact that he is becoming a pariah of the banking sector, despite the fact that he was parachuted in to help turn RBS around after it was bailed up by British taxpayers in 2008.

"This is clearly an attempt by him to prevent the escalating row over his bonus, distracting him from the job of running RBS, which is one of the biggest corporate turnarounds in the history of the banking sector."


©SkyNews

Labour 'to force vote on RBS bonus'

Labour will force a Commons vote calling for Royal Bank of Scotland chief executive Stephen Hester to be stripped of his bonus, a party source has said.

Pressure is mounting on RBS chief
executive Stephen Hester to waive his bonus

It will hold an Opposition Day debate the week after next to heap pressure on the Government as the row continues to grow over the payment, which is worth almost £1 million.

Although the vote will not be binding it could prove deeply embarrassing for the coalition, which has faced widespread criticism for its decision not to block the bonus at the taxpayer-funded bank.

A Labour source said: "David Cameron's failure of leadership cannot be allowed to stand. We will force a Commons vote to let MPs show the public's disapproval of Mr Hester's bonus."

© Press Association 2012

RBS chairman waives 1.4 million pound bonus after Hester row

Royal Bank of Scotland's (RBS.L) Chairman Philip Hampton will not pick up a 1.4 million pound stock bonus, the bailed-out bank said, following public anger and political squabbling over a 1 million pound bonus for its chief executive.

Anger over bankers' earnings has shown few signs of abating, with many still set for million pound salaries while elsewhere thousands lose their jobs as the global economy stutters in the face of Europe's debt crisis.

In Britain, the salaries of top staff at RBS and Lloyds (LLOY.L) are particularly controversial because both banks were bailed out to the tune of 66 billion pounds during the credit crisis, with Britain ending up with an 83 percent stake in RBS along with a 40 percent holding in Lloyds.

"Sir Philip Hampton will not receive the 5.17 million shares he was awarded in 2009 when he joined RBS," said a spokesman for the bank.

Sir Philip Hampton will not receive the 5.17 million shares he was awarded in 2009

Based on RBS's closing share price of 27.74 pence Friday, Hampton's share-based award would have been worth 1.4 million pounds. In 2010, Hampton received a basic salary of 750,000 pounds, with no extra performance bonus or benefits.

The decision not to proceed with Hampton's stock award comes after politicians from across the spectrum criticised the company's decision to give its chief executive Stephen Hester a stock bonus worth roughly 1 million pounds.

Earlier this week, RBS halved CEO Hester's stock bonus for 2011 to just under 1 million pounds from 2 million pounds in 2010, but resisted calls to axe the bonus altogether. Hester has a basic salary of 1.2 million pounds.

The decision by Lloyds chief executive Antonio Horta-Osorio to waive his bonus after he spent time off work on sick leave, had put further pressure on Hester to make a similar gesture.

CAMERON SEEKS TO DEFLECT CRITICISM OVER RBS PAY

RBS shares fell sharply over the course of 2011, losing approximately half their value, and the stock remains well below the average price of 49.90 pence at which the British taxpayer acquired its stake in the bank.

Hester has also had to cut more than 30,000 jobs since taking up his post in 2008, as part of a large-scale restructuring to sell off assets and businesses.

Britain's Conservative-led coalition government has also been criticised for not doing more to curb Hester's pay, facing attacks from not only the opposition Labor party but also from its own members.

CAMERON SEEKS TO DEFLECT CRITICISM

Saturday, Prime Minister David Cameron sought to deflect criticism over his handling of the issue, arguing it would be worse for the taxpayer if RBS had to find a new management team.

"Let me get the facts straight, the fact is Stephen Hester was brought in by the last government, a contract signed by the last government, to turn round RBS, a bank that had got itself into a complete mess," Cameron told television reporters.

"The government has made its views known, and that is why his bonus was cut in half compared to last year. But we do have to bear in mind that the alternatives to what is happening now could be even more expensive if you had a whole new team coming into RBS," he added.

Hester joined RBS in October 2008 from property company British Land (BLND.L) as RBS was reeling from its disastrous acquisition of Dutch bank ABN AMRO.

Britain used some 45 billion pounds of taxpayers' money to rescue RBS, leading to the eventual resignation of former head Sir Fred Goodwin, who was replaced by Hester.

Hester, who had previously worked at rival banks Abbey National and Credit Suisse (CSGN.VX), was given a brief to restructure RBS and return it to health, and RBS said he deserved his stock bonus for making the bank "safer."

Britain aims to eventually sell its state holdings in RBS and Lloyds back to the private sector, although volatile financial markets have meant the timing of any disposal is uncertain.

(Reporting by Sudip Kar-Gupta; Editing by Tim Castle and Toby Chopra)
©Reuters 2012

Pressure grows over RBS bonuses

Deputy Prime Minister Nick Clegg has insisted there should be no big, million pound-plus bonus payout for the boss of the mainly state-owned Royal Bank of Scotland.

Mr Clegg dismissed reports that RBS chief executive Stephen Hester was in line for an award of £1.5 million or more as "pure speculation".

"You are asking me about a hypothetical outcome that I don't believe will arise," he told BBC1's The Andrew Marr Show.

Royal Bank of Scotland chief executive Stephen Hester
received a two million pound bonus last year

He said the Government's ability to influence bonus payments at RBS - which is 83%-owned by the taxpayer - was "constrained" as a result of contractual arrangements entered into by the last Labour government.

However he made clear that ministers expected the overall bonus pool at the bank to be "considerably lower" than it was last year.

"We have been very, very clear that in RBS - and for that matter in other banks - the bonus pool has got to be considerably lower than it was last year," he told BBC1's The Andrew Marr Show.

"The Bank of England, the Financial Services Authority, are saying exactly the same thing because any money that is spare should be where possible be used to repair the banks' balance sheets."

Mr Clegg stressed no decisions had been taken yet on the bonuses at RBS. But after David Cameron said last week that Mr Hester's bonus would be "a lot less" than the £2 million award he received last year, Labour leader Ed Miliband said the Prime Minister had to ensure the awards were kept in check.

And Mr Miliband later went further, calling for Mr Hester to be stripped of his bonus altogether. "Taxpayers are still footing the bill for what's happening at the Royal Bank of Scotland," he told BBC Radio 5 Live's Pienaar's Politics.

"If responsibility means anything I don't think he should be getting his bonus. And the Prime Minister, if he's true to his word, would exercise his responsibility to do something about that."

Sick-leave bank chief refuses bonus

The boss of taxpayer-backed Lloyds Banking Group has said that he would not take his annual bonus for 2011 to reflect the "impact" his leave of absence had had on the bank.

Antonio Horta-Osorio, who returned to work earlier this week after taking two months off due to severe sleeping problems, said he acknowledged that his absence had had an impact both "inside and outside the bank, including for shareholders".

Lloyds Banking Group boss Antonio Horta-Osorio has said he will not take his annual bonus

Lloyds, which is 40.2% state-owned, saw its shares slump when Mr Horta-Osorio stepped down, amid fears that his leave could become permanent and derail progress made on reviving the bank.

The 47-year-old Portuguese-born banker, whose pay and bonus entitlement will be revealed in the group's annual report next month, added that his bonus should reflect the performance of the bank but also the "tough financial circumstances that many people are facing".

The announcement follows a pledge from Prime Minister David Cameron to crack down on City pay, which would include introducing a binding vote for shareholders on executives' salaries.

©Press Association 2012