19/08/2009 12:42
Royal Bank of Scotland (RBS), which is 70 per cent-owned by the British taxpayer, has awarded a bonus worth £2.3 million including £1 million to a new executive just to stay with the company for two years.
In a move that is likely to provoke further outrage from Britons whose taxes saved the bank from collapse, RBS has given Brian Hartzer a "golden hello" of 1.99 million free shares worth nearly £1 million.
Mr Hartzer, who joined RBS this week from ANZ, the Australian bank, simply has to stay with RBS for two years to qualify for the free shares.
There are no performance targets attached to the bonus.
Mr Hartzer, who will head RBS's retail branch network, will also receive a further 2.83 million free shares — worth another £1.3 million at the current share price — in 2012 if he meets performance targets.
RBS said that the bonuses were being paid "as compensation for incentives forfeited on leaving his previous employer".
RBS also handed Nathan Bostock, another new recruit, coming from Abbey to the new RBS role of head of risk and restructuring, 1.3 million free share options, worth £610,000.
He is also getting 2.3 million share options at 46.2p. These will all vest in three years.
It emerged last week that RBS had spent more than £10 million on hiring two bankers. Antonio Polverino, a star banker from Merrill Lynch, is on a £7 million one-year package while the bank’s new finance director, Bruce Van Saun, is joining from Bank of New York Mellon next month on a multimillion-pound salary.
Last week, the Financial Services Authority (FSA), the City regulator, published a new pay code which stated that guarantees running for more than a year were "unlikely to be consistent with effective risk management”.
The FSA said that, if a bank flouted its rules, it would force that institution to hold more capital and might even impose a fine.
But, lawyers are concerned that by not defining "guaranteed bonuses" the FSA has left wriggle-room for banks.
Commenting on Mr Hartzer and Mr Bostock’s bonuses, RBS said: "The awards are in line with FSA principles, deferred over the long term and subject to clawback provisions."
Stephen Hester, the bank’s chief executive, heavily criticised for being in line for a bonus of up to £10 million, said two weeks ago that it was in "taxpayers' interests" to reward bankers with bonuses, which would otherwise lead to a "damaging exodus" of top talent.
Mr Hester said: "We must pay competitively because we must have good people." He added: "We are acutely conscious of the debt we owe to society and the humility that bankers need to start showing again. We hope in our small way we have been at the forefront of better behaviour."
However, RBS’s financial results for the first six months of the year showed that it was failing to meet lending targets to businesses. Its business lending fell by £7.3 billion despite agreeing, in return for state aid, to lend £25 billion.
In a move that is likely to provoke further outrage from Britons whose taxes saved the bank from collapse, RBS has given Brian Hartzer a "golden hello" of 1.99 million free shares worth nearly £1 million.
Mr Hartzer, who joined RBS this week from ANZ, the Australian bank, simply has to stay with RBS for two years to qualify for the free shares.
There are no performance targets attached to the bonus.
Mr Hartzer, who will head RBS's retail branch network, will also receive a further 2.83 million free shares — worth another £1.3 million at the current share price — in 2012 if he meets performance targets.
RBS said that the bonuses were being paid "as compensation for incentives forfeited on leaving his previous employer".
RBS also handed Nathan Bostock, another new recruit, coming from Abbey to the new RBS role of head of risk and restructuring, 1.3 million free share options, worth £610,000.
He is also getting 2.3 million share options at 46.2p. These will all vest in three years.
It emerged last week that RBS had spent more than £10 million on hiring two bankers. Antonio Polverino, a star banker from Merrill Lynch, is on a £7 million one-year package while the bank’s new finance director, Bruce Van Saun, is joining from Bank of New York Mellon next month on a multimillion-pound salary.
Last week, the Financial Services Authority (FSA), the City regulator, published a new pay code which stated that guarantees running for more than a year were "unlikely to be consistent with effective risk management”.
The FSA said that, if a bank flouted its rules, it would force that institution to hold more capital and might even impose a fine.
But, lawyers are concerned that by not defining "guaranteed bonuses" the FSA has left wriggle-room for banks.
Commenting on Mr Hartzer and Mr Bostock’s bonuses, RBS said: "The awards are in line with FSA principles, deferred over the long term and subject to clawback provisions."
Stephen Hester, the bank’s chief executive, heavily criticised for being in line for a bonus of up to £10 million, said two weeks ago that it was in "taxpayers' interests" to reward bankers with bonuses, which would otherwise lead to a "damaging exodus" of top talent.
Mr Hester said: "We must pay competitively because we must have good people." He added: "We are acutely conscious of the debt we owe to society and the humility that bankers need to start showing again. We hope in our small way we have been at the forefront of better behaviour."
However, RBS’s financial results for the first six months of the year showed that it was failing to meet lending targets to businesses. Its business lending fell by £7.3 billion despite agreeing, in return for state aid, to lend £25 billion.
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