The banker bonus row continues

RBS want to give £1.5bn to their top bankers

As Christmas approaches, industries all around the country will be hoping for festive bonuses... even bankers, whose excessive pay packages have caused outrage in recent months in the aftermath of the economic downturn. The banker pay and bonus row however has now taken another turn, as it has been revealed that over 5000 bankers will be paid more than GBP£1 million each this years.

This latest chapter in the bonus row was admitted by City Minister Lord Myners after Sky News reported that the Royal Bank of Scotland board had threatened to quit if the Government vetoes bonus payments approved by the bank's directors.

In his admission, Lord Myners estimated that senior executives and traders would earn at least £5 billion between them in salary and bonuses. As a result, he has written to shareholders asking them what they will do to stop what he calls "the unjustified levels of remuneration".

RBS also reportedly want to give out GBP£1.5 billion to their top investment bankers, despite the bank being 70 percent owned by the tax-payer after being bailed out during the recession. The bank apparently fears that they will lose their top talent if pay cuts are made.

It is however, not just RBS.

Fat cats, fat cheques

According to Sky sources, Barclays is going to award 22,000 investment bankers with a 150 percent pay rise, in order to beat restrictions on bonuses.

The government has warned that the Treasury could seize control of the 'bonus pot', especially considering the promise the bailed-out banks made, to lend a net GBP£27 billion to large and small businesses this year which they have so far failed to do.

However RBS chief executive Stephen Hester has responded by saying that they have clauses in their contracts allowing for some of their pay packets to be clawed back if they are felt to have fallen short.Not just that, but if The Treasury does seize the 'bonus pot', the bank could lose key staff. The bank board have argued that paying bonuses is essential to maintaining competitiveness, and that have even threatened to step down if the government blocks the bonuses.

Speaking to Sky, deputy business editor of The Times, Ian King, said it could lead to 'a messy stand-off'.

"Our guidance is that RBS is looking to make bonus payments in 2009 of roughly GBP£1.5 billion. Behind the scenes, we are being briefed that the Treasury would be comfortable with around £1 billion."

However, while it seems the main source of contention is keep the bank board happy, do one has yet thought what the tax-payers will say if such bonuses go through.

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