The head of Royal Bank of Scotland Stephen Hester has been awarded a £2.04 million bonus for 2010, as the UK’s state-backed banks confirmed their chief executives’ pay packets.
Lloyds Banking Group, which is 41% owned by the taxpayer, confirmed outgoing boss Eric Daniels will be offered a £1.45 million bonus, 62% of what he could have received, while RBS added Mr Hester will not receive a pay rise in 2011.
The bonus pay-outs for both bank bosses will be in shares, which will vest in three years time.
RBS, 83% Government owned, also revealed that under terms agreed with the UKFI, which manages the Government’s stake in both RBS and Lloyds, the bonus pool for RBS’s investment banking arm will be less than £950 million in 2010 – lower than in 2009, when the pool hit £1.3 billion.
Last year, Mr Hester and Mr Daniels both waived their bonuses, after being awarded £1.6 million and £2.3 million respectively.
A spokeswoman for Lloyds said “in considering the award, the board took into account the current environment and desire for restraint”. While RBS provided figures, they offered no further comment.
In a speech to the House of Commons, the Chancellor shed further light on the agreements the Government had made with both RBS and Lloyds.
For all staff at RBS and Lloyds, the maximum upfront cash bonuses will be limited to a maximum of £2,000 this year, the Chancellor said.
George Osborne added that all executive directors, including the chief executives, agreed to receive this year’s bonuses entirely in the form of shares, and will have to wait until 2013 to convert these shares to cash.
RBS and Lloyds received a series of government bailouts in 2008 and 2009, putting them both at the frontline in a long-raging debate over bankers’ bonuses.