A theme is emerging: every weekend there is a slew of negative news about bonuses at the Royal Bank of Scotland. This weekend was no different.
On Saturday it emerged that George Osborne, the UK Chancellor of the Exchequer, was demanding that RBS pay the US element of its Libor fine itself- ideally from the bonus pool. Osborne confirmed that this is his intention in a speech today: “When it comes to RBS, I am clear that the bill for any US fine related to this investigation should on this occasion be paid for by the bankers, and not the taxpayer,” Osborne said.
The US element of RBS’s Libor fine will be around £300m, predicts the Financial Times. Last year’s RBS bonus pool was £390m, suggesting this year’s RBS bonuses could be reduced by nearly 80% this year. To soften the blow, it seems that not all of the US fine will be taken from this year’s bonuses – some will be clawed back from bonuses awarded in previous years. This means that this year’s RBS bonus clawback will be far more wide-ranging than previously anticipated, taking in managers in the investment bank as well as traders and executives who were directly implicated in the manipulation of Libor.
Worse (if you work at RBS), it seems that the commitment to cut bonuses to pay for Libor fines will be ongoing. The Financial Times said that even after cutting this year’s bonus pool and clawing back previous year’s bonuses, there’s still likely to be a shortfall in the money available to pay the US fine. George Osborne has therefore indicated that he expects to make up the difference by cutting future bonus rounds, said the FT.
In future, Antonio Horta-Osorio will only receive a bonus if Lloyds’ share price closes above 73.6p on a to-be-agreed minimum number of trading days. (Sky)
Now that Barclays has hired David Walker and Hector Sants, it says the FSA is giving it the benefit of the doubt. (Wall Street Journal)
George Osborne isn’t going to restrict banks’ leverage more than is necessary under Basel III. (Financial Times)
The head of MENA DCM has left BNP Paribas. (Bloomberg)
Gael de Boissard, co-head of Credit Suisse’s investment bank, says scale isn’t the issue in fixed income – CS is focused on competing in 81 business lines only. (Financial Times)
The wealthiest 1% of taxpayers in the UK earn more than £150k a year and pay 27% of UK income tax. (Telegraph)
Deutsche Bank has ditched all formulaic bonus models. (Wall Street Journal)
Defining trait of bankers who are addicted to gambling: an exaggerated confidence that they are going to make money. (Financial Times)
Ex-JPMorgan banker Ian Hannam is launching a new firm, Hannam & Partners. (Financial News)
On any night of the week in London, if you go to a Gamblers Anonymous meeting, you will find a City banker turning up in tears over how much money he has just lost. (Financial Times)
Stress in middle age is correlated with disability in later life. (Medical Express)