9th March 2011
It may be a minority view, but was RBS in such a mess that the current management is worth the money?
The bank has announced a package worth £28m for senior figures for 2010 including £6.5m for chief executive Stephen Hester though this is all in shares which can't be accessed yet, as reported here on the Daily Telegraph.
Meanwhile, Barclays is paying spectacular bonuses of £110m to five senior executives provoking the predictable row, as reported here on the Guardian.
But is there more to this? The RBS deals are structured over the medium term and based, as the Telegraph notes, on a share price of 44.49p.
The deals will increase in value if the shares start to rise, yet for every 1p increase benefitting the directors, the state- which owns 83 per cent of the bank – gains an additional £900m on paper, increasing the value to the taxpayer of any eventual sell off.
The fact RBS needed a fundamental clean up is made clear by other related Telegraph stories.
The paper reveals that only 17 per cent of assets placed in the Government's asset protection scheme came from ABN Amro.
This purchase of the Dutch bank had been labelled as a deal too far that forced RBS to seek Government help.
But with the remaining 83 per cent of toxic assets coming from RBS's own investment banking and real estate books, making the bank fit for purpose again may be a bigger task than previously thought.