Government exit sees RBS executives set for multimillion-pound payouts

Ross McEwan, CEO of Royal Bank of Scotland

The payouts come a week after the government took the first steps to begin reducing its stake, which has fallen from 79 per cent to just below 73 per cent as a result.

The bank’s chief executive, Ross McEwan, is poised to receive the last tranche of the 1m shares he was awarded in August 2012 when he was hired from Commonwealth Bank of Australia.

The rest of the executive team are to be handed shares worth more than £2m to sidestep the European Union’s bonus cap which prevents banks handing out bonuses bigger than an employee’s salary, or more than double it, if shareholders approve. McEwan, who replaced Stephen Hester as chief executive in September 2013, has waived previous share allowances, which would have been £1m in his case.

In February, RBS issued a statement about McEwan’s intentions towards the share allowances which said: “Ross McEwan has told the RBS board he does not intend to take the proceeds from his 2015 role-based allowance. Ross does not want this issue to be a distraction from the task of building a great bank for customers and shareholders.”

He is, however, due to be handed 95,318 shares, the last portion of the package he was offered in 2012 when he was lured from Australia to London to run the retail arm of the bank.

According to the bank’s latest annual report, these shares were included in his total pay for 2014 which showed he received £1.8m in total. The shares are worth around £330,000 and were due to vest on 8 August. This would suggest that a stock exchange announcement confirming they have been released to him is likely in the coming days.

Stock exchange disclosures from a year ago, also suggest that the bank is due to announce the share allowances that are being used to sidestep the EU bonus cap.

These are part-payments of the annual allowances being handed to bankers to try to prevent their pay from falling as a result of the bonus cap. These share awards are being used by a large number of banks following the restriction on bonuses. In 2014, for instance, HSBC, Barclays, Lloyds Banking Group and RBS handed out a total of £30m in such allowances to their top management teams.

The payments are being made amid a row over the sale of just over 5% of the taxpayers’ stake at a £1bn loss. Hedge funds bought 60% of the shares sold at 330p on Monday evening last week, just days after the bank had reported a half-year loss and warned it faced a swath of penalties over the way it sold mortgage bonds in the US before the crisis.

The 330p is below the 502p average price that taxpayers paid for the stake, which was valued at £45bn at the time of the bailouts. The shares closed on Friday at 345.5p. The government said it will not sell any more shares for 90 days, which suggests the next disposal could take place in December.