RBS Recoups 302 Million Pounds From Employees After Libor

Royal Bank of Scotland Group Plc, Britain’s biggest publicly owned lender, will recoup 302 million pounds ($458 million) from bankers by cutting its bonus pool and clawing back compensation following its fine for rigging Libor.

The bank, which today reported a wider full-year loss, reduced bonuses by 110 million pounds and clawed back awards from previous years valued at 112 million pounds, Edinburgh-based RBS said in a statement. It will also cut long-term incentives by 30 million pounds and future bonuses by a further 50 million pounds.

“The actions we have taken reinforce the messages we are sending on the how seriously the board takes integrity and risk and control issues,” the lender said. “The impact of such issues on our shareholders and wider stakeholders extends beyond those directly involved in Libor, so it is appropriate that remuneration actions have a group-wide impact.”

RBS, fined $612 million this month for manipulating benchmark interest rates, said on Feb. 6 it would pay for the U.S. portion of the fine from bonuses and previously-awarded pay. The pledge to recover the money from bankers’ bonuses was criticized by British lawmakers because the bank didn’t disclose the size of the bonus pool before the reduction.

The lender said it will reduce the amount it allocates for investment bankers’ bonuses for 2012 to 215 million pounds from about 360 million pounds for 2011. About half of RBS’s bonuses for 2012 can be clawed back, Chairman Philip Hampton has said.

‘Creative Accounting’

“We weren’t given sufficient confidence that the arrangement for funding the fines from bonuses will do what it says on the tin,” Andrew Tyrie, Parliamentary Commission on Banking Standards chairman, said on Feb 12. “This must be more than an exercise in creative accounting. It would be all too easy to artificially adjust a bonus pool, the size of which is yet to be decided.”

More than a dozen RBS traders made hundreds of attempts to manipulate yen and Swiss franc Libor between mid-2006 and 2010 to benefit their trading positions, sometimes colluding with other firms, the U.S. Commodity Futures Trading Commission said.

RBS received the world’s biggest banking bailout in 2008, and is 81 percent owned by the British taxpayer. Treasury Minister Greg Clark described the lender’s fine as a “day of shame” for British lenders.

Barclays Plc, Britain’s second-biggest bank by assets, will reveal how many of its workers earn more than 1 million pounds in its annual report next month, according to a person familiar with the matter. RBS Chief Executive Officer Stephen Hester said today his bank will remain “at the forefront” of pay transparency, pledging to match Barclays’s disclosure.

-- Editors: Edward Evans, Jon Menon

Before it's here, it's on the Bloomberg Terminal.