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Royal Bank of Scotland: Pay

Volume 494: debated on Wednesday 24 June 2009

To ask the Chancellor of the Exchequer what recent discussions he has had with the Chairman and Chief Executive of UK Financial Investments in respect of bonuses planned to be awarded to senior bankers at Royal Bank of Scotland. (278383)

UK Financial Investments Ltd. (UKFI) has been set up to manage the Government’s investments in financial institutions on a commercial basis and at arm’s length. As part of this work UKFI is monitoring the non-lending conditions, including remuneration, attached to recapitalisation and participation in the Asset Protection Scheme for the Royal Bank of Scotland (RBS). HM Treasury has regular discussions with UK Financial Investments and regularly monitors UKFI’s performance against its objectives.

UKFI has worked to ensure management incentivisation based on long-term, sustainable performance and no rewards for failure, in order to protect the interest of the taxpayer as a shareholder.

RBS has announced that there will be no bonuses or pay increases made to staff associated with the major losses suffered in 2008 and that board executive directors will receive no bonus for 2008 performance and no pay increase in 2009. No discretionary cash bonuses will be paid in 2009 for performance in 2008, and only legally binding guaranteed bonuses will be paid.