Royal Bank of Scotland is about to announce losses of more than £7 billion for 2009 but will still hand out enormous bonuses to its investment bankers.
State-controlled RBS is in the final throes of negotiations with the Treasury over its bonus scheme. The talks are expected to conclude within 10 days, ahead of the publication of the bank's full-year results.
The Treasury is expected to approve a total bonus pool of about £1.3 billion despite the expected losses. The move will spark a fresh furore over payments at banks that were bailed out by the taxpayer.
RBS is 84%-owned by the state thanks to huge injections of government funds. It is also being supported by a government-backed insurance scheme, which has helped to restore market confidence in the bank.
Analysts think RBS's losses will total £7 billion after a £14 billion hit on bad debts. Huge losses have been suffered on loans to businesses, on property deals and on complex derivatives. Once exceptional items are taken into account, these should be cut to £5 billion.
The only part of the bank expected to do well is its controversial investment-banking arm, which is on track to make billions of pounds in profits.
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