UKFI Mulls Vote On Likely RBS Bonus Request
The agency which manages taxpayers' investment in Royal Bank of Scotland (RBS) is mulling abstaining on a motion that would allow the lender to double the level of its employees' bonuses.
Sky News understands that directors of UK Financial Investments (UKFI) have been discussing in recent days their approach to an impending proposal from the bank on the issue.
New European rules mean that from this year, banks must gain permission from shareholders to pay more than the level of an employee's basic salary as a bonus.
The subject is politically contentious because RBS is 81%-owned by the Government, although its voting stake is slightly lower.
RBS, which reports its full-year results at the end of February, has not yet submitted formal proposals to UKFI relating to either 2013 bonuses or staff pay under the new EU rules from this year onwards.
While it has therefore not yet taken any formal decisions, UKFI has begun discussing its likely voting stance on a motion that would enable RBS to pay 200% of salaries in bonuses.
An insider said on Thursday that abstaining was "a real possibility" with RBS' board keen to have the flexibility on pay that it argues would allow it to retain senior staff in its shrinking investment banking and markets division.
"There is a feeling among some that the interests of shareholders would be compromised by blocking the move," the source said.
"It is early days, but abstaining may be the most likely outcome."
A decision by UKFI not to oppose such a motion at RBS' annual meeting later this year could, nevertheless, prove to be politically embarrassing for David Cameron and George Osborne.
Last week, Mr Cameron and Ed Miliband, the Labour leader, clashed in the House of Commons over RBS's plans, with the Prime Minister saying that any proposals to increase the aggregate pay and bonus pool would be blocked.
He stopped short, however, of promising to use the Government's stake to vote against the motion enabling RBS to pay the higher bonus level.
Under the last Labour government, much higher bonuses were paid to some RBS staff following its bail-out in 2008, a fact that Mr Cameron is likely to point to in the coming weeks.
UKFI, which has a mandate to operate at arm's length from the Treasury, declined to comment. A Treasury source emphasised that formal proposals had not yet been provided by RBS.
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