Royal Bank of Scotland chief to forgo bonus for 2009, 3rd UK banking exec to do so

Royal Bank of Scotland chief to forgo bonus

LONDON — Royal Bank of Scotland PLC chief Stephen Hester intends to decline his bonus for 2009, making him the third major British banking executive to do so, a person with knowledge of the matter said Sunday.

Hester stood to earn a bonus of about 1.6 million pounds ($2.5 million) depending on performance, the person said, speaking on condition of anonymity because sensitive negotiations over the size of RBS’s bonus pool are ongoing.

The British government took an 84 percent stake in the bank after it was brought to the brink of collapse by the global credit crunch, and in a circular sent to shareholders in December the bank said it had given officials veto power over the size of its pay-outs.

Although RBS agreed to give the government a big say in the matter, it has complained that outside control over how much it could award in bonuses could put it at “a significant competitive disadvantage.”

Media reports suggested that Hester’s move could be an effort to depoliticize the bonus issue before RBS’s full year results next week.

Two other banking executives have forsworn their bonuses: John Varley, chief executive of Barclays, and Bob Diamond, the bank’s president, both turned them down last week.