Royal Bank of Scotland is 83% owned by the British taxpayer
2:43pm UK, Monday January 09, 2012
A senior executive at state-owned Royal Bank of Scotland is reportedly due to receive a £4m bonus this year, despite the Prime Minister saying he plans to stop bosses being rewarded for failure.
John Hourican, the head of RBS‘ investment banking arm, is in line to receive the special bonus in April as part of a long-term incentive plan linked to the acquisition of ABN Amro in 2007, according to the Financial Times and Daily Telegraph newspapers.
However, responding to the report, an RBS spokesperson told Sky News that it was “completely inaccurate to imply that any decisions have been taken” over payouts.
John Hourican has been the head of the investment bank since 2008
Mr Hourican was chief financial officer at ABN Amro Group before heading RBS’ investment bank.
The 71.1bn euro (£59bn) takeover of the Dutch bank played a significant role in the failure of RBS.
At the bank’s annual general meeting in 2009, the then-chairman of RBS, Sir Philip Hampton, said: “With the benefit of hindsight it can now be seen as the wrong price, the wrong way to pay, at the wrong time and the wrong deal.”
David Cameron has said he is determined to end the “merry-go-round” of super-rich bosses rubber-stamping each other’s enormous salaries and being rewarded for failure, adding that he wants to make changes this year.
In an interview with Sky News he said he would not comment on individual cases but suggested the RBS deal may have been agreed before his administration came to power.
RBS Share Price 6-Month Chart
A Downing Street spokesman said UK Financial Investments, which represents the Government’s interests as a shareholder in partly state-owned banks, will “engage with RBS to discuss executive pay over the coming weeks and will make sure that pay reflects and rewards performance”.
The Government holds 83% of the shares in RBS, but ministers cannot intervene directly in decisions on bonuses, as the bank is operated at “arms length”.
Mr Hourican oversees 19,000 employees across 39 countries at the bank’s global banking and markets division, which provides financing, risk management and advisory services to public and private institutions.
The benefits expected in April are almost 29 million shares and options granted in 2009 as part of a long-term initiative to restructure the group, according to the Financial Times.
However, in recent months RBS has been moving to offload assets, including the division that Mr Hourican leads, as it tries to repay some of the £45bn bailout it was given.