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Last updated: February 8, 2012 8:22 pm
The chief executive of Royal Bank of Scotland hit back at politicians who put pressure on him to waive a £1m bonus, warning the furore could hinder his efforts to return the taxpayer’s £45bn investment in the bank.
In his first public appearance since the bruising bonus dispute, Stephen Hester said he had considered resigning from his post but decided doing so would be “indulgent”. He admitted he did not need the bonus on top of his £1.2m salary and longer-term incentives, adding that he was happy to be paid less than top executives at rival banks and other listed companies.
“I am not going to throw rocks at politicians . . . RBS made big mistakes,” Mr Hester said. But he warned that the recent interference “posed a question for the government as to whether RBS’s recovery – and getting back the £45bn – was going to be impeded by having some uncomfortable half-way house position”.
While Mr Hester said RBS needed to “regroup”, he believed the board could “find a way to rub along” with the government and acknowledged that politicians had to balance the bank’s recovery with other public interests.
Speaking frankly from his 12th floor City office, Mr Hester said that while the political pressure had made him question whether he could succeed at RBS, he was now “laser focused” on seeing out the bank’s recovery.
“I have put everything I have emotionally, physically and intellectually into helping RBS to recover,” he said. “I didn’t want to toss that away in a moment of pressure when the chips were down.”
Although Mr Hester had nothing to do with RBS’s near collapse, having been recruited three years ago from British Land to clear up the mess left by his predecessor Fred Goodwin, the government’s 83 per cent stake in the bank has put him in the firing line over pay.
His decision to forego his bonus followed a call by Ed Miliband, Labour leader, for a potentially damaging Commons vote on the issue.
RBS has launched a review of its pay practices that could eliminate annual bonuses altogether. However, Mr Hester recognised that any large payments – whether paid through annual bonuses or longer-term incentives – would be unpalatable for the public. “There is nothing I can ever do to win the societal argument on pay,” he said.
Mr Hester would not comment on the size of the overall bonus pool that RBS will pay to its investment bankers in the coming weeks – expected to be about £500m compared with £950m last year – or individual payments such as the 21m shares awarded to John Hourican, head of the investment bank, which are due to vest in April.
While agreeing that pay at the bank should be “restrained” when compared with rivals, he argued RBS staff should still be rewarded for having done a “damn good job”.
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