RBS paid £1.3bn bonuses on profit of just £1bn

By Philip Aldrick Published: 9:41PM GMT twenty-eight February 2010

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Stephen Hester, arch executive, used the stellar opening to clear the �1.3bn bonuses paid to investment bankers Photo: PA

The state-backed lender"s formula show that �4.7bn of the investment bank"s misfortune waste were hived off to the "non-core" multiplication being wound down. Although the bank"s separate in to "core" and "non-core" units has been well explained, the subdivision easily flattered the investment bank"s numbers and authorised government to benefaction it as a jot down year for the division.

Stephen Hester, arch executive, used the opening to clear the �1.3bn bonuses paid to investment bankers, at slightest 100 of that perceived some-more than �1m.

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RBS"s numbers show that impairments in the "core" investment bank totalled usually �640m, assisting it furnish �5.7bn of the �8.3bn of increase done by the bank"s ongoing businesses. By contrast, investment promissory note impairments dumped in the "non-core" bank totalled �4.7bn.

No alternative UK bank separates out the "toxic" bequest debt. Barclays" investment bank, Barclays Capital, suffered �2.6bn of impairments last year, slicing increase to �2.46bn. However, analysts point out that RBS, right away 84pc owned by the state, has taken some-more regressive outlines on the resources than peers, that contributed to the distance of the "non-core" writedowns.

Few rivals have private the "toxic" resources from their investment bank. Credit Suisse has hived resources off but is joining reward payments to the opening of the portfolio. Last week, Commerzbank, the German lender that was discovered by Berlin, pronounced it was not profitable any bonuses at all in the investment bank.

In contrariety with RBS, Michael Reuther, head of Commerzbank"s corporates & markets division, pronounced the lender would still be means to capture and keep talent.

RBS"s revised distinction numbers have no disproportion to the industry-best 27pc compensation-to-income comparative measure the customary comparator for reward practices. The comparative measure takes no criticism of loans that spin sour, usually the income generated.

RBS did not brawl the research but declined to comment. Insiders forked out that rounded off 7,000 jobs have been cut in the investment bank in the past dual years and the government overhauled. They constructed jot down revenues notwithstanding a outrageous restructuring. The "non-core" resources are right away rubbed by an wholly opposite team.

UKFI was entirely wakeful of the agreement when signing off the reward on interest of taxpayers.