British business minister Peter Mandelson today warned majority state-owned Royal Bank of Scotland over bonuses for staff after reports said payouts could total hundreds of millions of pounds.
RBS owns Ulster Bank and the soon to be wound-up First Active here.
RBS insisted no decision had yet been made on bonuses after an article in The Times newspaper reported that the bank was planning big bonuses for senior executives and traders.
'Obviously you have to work in a market where you have got to recruit the best people, keep the best people in place and motivate them,' Business Secretary Mandelson said.
But he warned that the reported size of the bonuses could be seen as 'exorbitant' saying: 'They have also got to consider how it looks and how it seems when those mistakes and losses have been made.'
RBS is now 70% owned by the British government. The bank has forecast it would make a record British corporate annual loss of up to £28 billion sterling.
According to The Times report, the body run by the finance ministry controlling the government's stake in RBS, UK Financial Investments, had given its approval in principle to the bonuses but had not considered the plans in detail. As part of its bailout conditions, no RBS board members are allowed to take bonuses but such payouts are allowed for employees below board level.
The Times said the bank would make a final decision on bonuses alongside its official results announcement, due in around three weeks.
RBS also said today that it had decided to retain its insurance division after ending talks with parties regarding a possible disposal of the business. The bank said it had realised that a sale of RBS Insurance 'would destroy value for RBS' shareholders'.
