RBS pays £576m in bonuses despite suffering £8.2bn loss
Chief executive admits decision is 'highly emotional one' but insists the bank needs to pay 'fairly'
THE Royal Bank of Scotland will pay out £576m in staff bonuses despite suffering an £8.2bn pre-tax loss last year – its sixth annual loss since the bank's 2008 government bailout.
Its chief executive, Ross McEwan, described the results as "very sobering" and admitted that the decision to pay hundreds of millions of pounds in bonuses after such large losses was a "highly emotional one".
However, he insisted that the bank needed to pay "fairly". The £576m figure marks a 15 per cent drop from the £679m bonuses paid in 2012 and RBS has previously announced that its nine top executives, including McEwan, would waive their bonuses for last year.
The bank, which is 81 per cent owned by the taxpayer, has outlined plans to undertake another sweeping overhaul of its operations.
McEwan told the Financial Times that RBS was the "least trusted bank in the least trusted sector" but has outlined plans for RBS to become the "the number one bank for customer service and the most trusted bank in the UK" by 2020.
He said RBS would restructure its seven divisions and support departments to leave just three customer businesses: personal, commercial and corporate.
This year it also plans to cut around £1bn of operational spend on things that do not help its customers. While RBS has not confirmed how many positions will be lost, McEwan said that "reducing costs and divesting businesses in the bank will inevitably result in reduced staff levels".
RBS had warned in January that it was setting aside an extra £3bn of provisions to cover the cost of litigation and mis-selling claims. It has also incurred impairments and losses of £4.8bn due to the establishment of a new internal "bad bank", known as RBS Capital Resolution.
Stripping out these costs, the group's operating profit last year was £2.5bn, reports the FT, down 15 per cent on 2012.