- Million-euro earners cut to 121 last year from 131 earlier
- CEO McEwan's pay more than doubles despite eighth annual loss
Royal Bank of Scotland Group Plc’s chairman said his firm doesn’t pursue highly paid investment bankers anymore, as it cut the number of million-euro earners and its bonus pool amid the continued shrinking of its securities unit.
“We are not seeking to recruit M&A rainmakers in the City, we don’t do that kind of business any more,” Howard Davies said when asked about pay on a call with reporters Friday. On the other hand “we don’t want to be in a position where we take a hair-shirt approach and can’t staff the bank with good people to do the job,” he said.
The number of employees earning more than 1 million euros ($1.1 million) fell to 121 last year from 131 in 2014, while the bonus pool was cut 11 percent to 373 million pounds ($522 million), according to RBS’s annual report.
Chief Executive Officer Ross McEwan is shrinking the company’s investment bank, cutting thousands of jobs, to focus on consumer lending in the U.K. and Ireland. Executive pay and bonuses at RBS have sparked political outcry in recent years, with the U.K. government still holding a stake in the lender almost eight years after the most expensive bank bailout.
The Edinburgh-based bank dropped as much as 12 percent in London trading after posting an annual net loss of 1.98 billion pounds last year that was driven by 3.6 billion pounds of writedowns and charges in the fourth quarter.
Despite Davies’s comments, one employee earned more than 6 million euros last year and another more than 5 million euros, the report shows. The latter person may have been McEwan, who was paid about 3.8 million pounds in 2015, equivalent to 5.1 million euros as of Dec. 31. That was more than double his 2014 compensation, and compares with an average salary of 37,000 pounds at the lender. Officials at the bank did not immediately respond to a request to identify the top-paid employee.
“While the bonus pool has been coming down year on year, including a further reduction in 2015, it is important that RBS does not become too disconnected from industry norms,” Sandy Crombie, chairman of the remuneration committee, said in the bank’s annual report. “The committee recognizes the need to maintain a commercial approach to pay and reward the hard work by those employees who are helping to turn around RBS.”
Executive directors, including McEwan, aren’t eligible for annual bonuses. The CEO will give away about 500,000 pounds of his pay to charity, a person briefed on the decision said Thursday.
More than 90 percent of the bonus pool will be directed to those “below the most senior RBS employees,” the bank said. About half of employees that receive such an award will get 2,000 pounds or less and a further 21 percent less than 5,000 pounds.
RBS’s shrinking number of millionaire earners contrasts with Lloyds Banking Group Plc, which created 17 more, up to 66 last year from 49 in 2014, according to its pay report. However, Lloyds’s bonus pool shrank 4 percent and CEO Antonio Horta-Osorio’s pay reduced 24 percent to 8.8 million pounds.