UKFI To Vote Against Any 200% Bonus in RBS

PUBLISHED: Apr 25 2014 @ 04:36 | Comments (0) | More info about Kenneth G. Mondero

The UK Financial Investments Limited, Britain’s manager of Government assets in the Royal Bank of Scotland (LSE:RBS) will vote against any proposal which would give bonuses to the bank’s executives up to twice as much as their salaries, the Board of the Royal Bank of Scotland told Friday.

81-percent government-owned RBS had earlier contemplated, in line with the trend amongst its major competitors, to provide for a 2:1 ratio of remuneration as early as February this year.

New EU rules however, have now decreed that any such increase in remuneration beyond 100 percent of basic pay will have to be approved by its shareholders; hence any such proposal will fail following the UKFI’s statement on the issue and will no longer present it during the bank’s annual general meeting which will be held on 25 June 2014.

The RBS Board, nonetheless, insists that “the best commercial solution for RBS is to have the flexibility on variable to fixed pay ratios that is now emerging as the sector norm.”

“This would also allow RBS to maintain the maximum amount of compensation that could be subject to performance conditions including claw back for conduct issues that may emerge in future.”

The RBS Board said it will try to mitigate concerns of “commercial and prudential risk” by opting to a 1:1 compensation ratio.

Shares of RBS were up 0.3 percent to 304.70 pence by 10:14 AM GMT, following the announcement.

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