Govt. put RBS at disadvantage by blocking its bonus plan: Standard Life

The UK Government's recent decision of blocking the bonus plan of Royal Bank of Scotland (RBS) would put the lender at a competitive disadvantage, a top Standard Life executive said.

David Cumming, the global head of equities at Standard Life, disapproved the government's move, saying it would weaken RBS' performance, reduce its value and consequently hurt taxpayers.

Referring to the government's decision of blocking RBS' bonus plan, Mr. Cumming said in a recent interview, "It was politically expedient but it's going to damage the bank and damage the taxpayers, so we would not have been in support of that measure."

The government recently has prevented RBS from paying its executives bonuses of up to 200 per cent of their fixed salaries, as Brussels capped bonus payments at 100 per cent of salaries unless shareholders give their approval for higher bonuses. Ross McEwan, the chief executive officer of RBS, will next year receive allowances worth £1 million, the same size as his fixed salary.

At Barclays' annual meeting last week, Standard Life had voted against its remuneration report but supported its plan to pay bonuses twice the size of executives' salaries.

Ian Gordon, an analyst with Investec, has predicted that RBS will likely post a pre-tax loss of 203 million pounds for first quarter of this year, as against a profit of 826 million pounds in the corresponding quarter of the previous year.

RBS was bailed out by the government with taxpayers' 41 billion pounds at the peak of economic slump in 2008. The taxpayer now owns nearly 80 per cent stake in the bailed-out lender.

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