RBS bosses 'may quit' over bonus curb
Updated on 03 December 2009
Business Secretary Lord Mandelson says he "understands" why directors at the Royal Bank of Scotland are threatening to quit if the Treasury blocks plans to pay staff bonuses.
RBS board members were reportedly advised to resign if they lose the power to run the largely state-owned bank for the benefit of shareholders. The bank is planning to pay an estimated £1.5bn in bonuses to staff in its investment arm.
Chancellor Alistair Darling signalled he is prepared to veto the size of the RBS bonus pool, which is around 50 per cent bigger than last year.
Lord Mandelson said today that he could relate to the directors but said that the government was entitled to demand "restraint" on bonuses.
"The government does not run RBS, it is run by its management and its board," he told BBC Radio 4.
"Equally we own a very large part of it and we are entitled to express our views as we see the public's interest, and we are entitled to represent and reflect public opinion on this equally.
"My own view and the government's view is that restraint has to be exercised by RBS and other banks.
"But I understand the point of view that RBS directors are expressing.
"They say they have to remain competitive in the market for recruiting senior executives, and that is why it is important that all the banks are equally restrained and that RBS is not singled out.
"But nobody is suggesting that will happen."
News of the row came as City Minister Lord Myners warned that at least 5,000 UK bankers will earn more than £1m this year unless action is taken.
He called on major shareholding institutions to tackle the issue immediately before it was too late.
