RBS gives bankers £1.5bn despite profit shortfall

Taxpayer-owned Royal Bank of Scotland has paid or promised salaries and bonuses totalling £1.53 billion to its investment bankers so far this year despite falling profits.

Pay levels for the 17,700 investment bankers at RBS were almost the same in the first half of this year as a year earlier although profits at the investment bank fell from £4.5 billion to £2.7 billion.

RBS, which is 83 per cent owned by the taxpayer, scraped back into the black in the last six months, swinging from losses of £1 billion to profits of mere £9 million.

Banks are under increasing pressure from politicians to curb bonus and dividends until they increase lending to small businesses. Business Secretary Vince Cable has threatened another bonus tax if they fail to do so.

Britain's big five banks this week declared pre-tax profits totalling £15.5 billion — almost twice the recent City forecasts of just £8.4 billion.

RBS chief executive Stephen Hester said the vast majority of 157,000 staff were not on big bonuses. He said: "We will lend as much as our customers want us to but activity is subdued.

"RBS has been at the forefront of pay reform in banking. I would expect us to contine to take a respoonsible attitude in this area. Of course, all of us are wrestling the need to be globally competitive and the need to perform well to justify what we are doing."

RBS lent £3.2 million of new mortgages between March and June out of its government target for the tax year of £8 billion. Lending to business was £17.1 billion in the four months against an annual target of £50 billion.