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Rescued bank to pay millions in bonuses


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Rescued bank to pay millions in bonuses

RBS 'making monkeys' out of the government, says Vince Cable

* Simon Bowers

* The Guardian,

* Saturday November 1 2008

Royal Bank of Scotland, which is being bailed out with £20bn of taxpayers' money, has signalled it is preparing to pay bonuses to thousands of staff despite government pledges to crack down on City pay.

The bank has set aside £1.79bn to cover "staff costs" - including discretionary bonuses - at its investment banking division for the first six months of the year alone. The same division caused a £5.9bn writedown that wiped out the bank's profits for the same period.

The government had demanded that boardroom directors at RBS should not receive bonuses this year and the chief executive, Sir Fred Goodwin, is walking away without a pay-off. But below boardroom level, RBS and other groups are preparing to pay bonuses to investment bankers who continue to generate profits.

The disclosure drew fierce criticism from Vince Cable, the Liberal Democrat Treasury spokesman.

"The government said they would attach strict conditions on bonuses and it is very clear they are doing nothing of the kind.

"The banks are just making complete monkeys of them."

He suggested the government would not have agreed to bail out any standalone investment bank. RBS and others had become "entangled with casino-style investment banking operations", he said.

Despite the continuing financial turmoil and widespread criticism of the bonus culture in the City, the bank is understood to believe the payments are defensible.

A source said: "I think everybody would expect [that those responsible for writedowns] would not get a bonus. But there are people who still made fairly substantial money in other product areas - you cannot just not pay them bonuses, they will just go elsewhere." Asked about the likely bonus culture after taxpayer-funded bail-out, the source said: "If the government does end up becoming a shareholder, RBS is still a listed entity. It remains the board's responsibility to ensure it is run commercially.

Full story, source: The Guardian

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I wonder if certain peoples outrage against "Redistributive Justice" works when it goes the other direction...it seems to be a horrible thing to take from the rich to give to the poor(that is when all the name calling starts- socialist, marxist...), but somehow when you take from the middle class and give it to the rich(in hunks of 800 bn at a time) who fumbled it in the first place, nary a word is said...

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I wonder if certain peoples outrage against "Redistributive Justice" works when it goes the other direction...it seems to be a horrible thing to take from the rich to give to the poor(that is when all the name calling starts- socialist, marxist...), but somehow when you take from the middle class and give it to the rich(in hunks of 800 bn at a time) who fumbled it in the first place, nary a word is said...

Or as I call it: The middle class bail out the rich with the taxes the rich did not pay :yes:

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