As the bonus pool at HSBC is expanded to £1.7bn in the UK, the bonus pool at RBS is cut to £390m - globally
It’s RBS results day. Despite a far larger than expected overall loss following £950m of compensation for the PPI programme and £1.1bn of sovereign debt writedowns, the bank is keen to emphasise that it’s not really doing that badly.
“Our Core bank made £6.1bn in operating profits in 2011,” tweeted its media team. £1.6bn, or 26% of this was attributable to global banking and markets, which achieved an ROE of 7.7%. This was 46% down on 2010 and looks bad when compared to the 17% ROE achieved in 2010 and the 30% ROE achieved in 209, but perfectly acceptable compared to the 3.7% achieved by Goldman Sachs.
Nevertheless, following popular demand, the investment banking bonus pool has been reduced by 58% to £390m globally, without (it seems) any of the mitigating retention bonuses for senior staff that followed similar bonus cuts at UBS. Cash bonuses are down 44%.
RBS’s allocation looks especially parsimonious given the £1.7bn apparently on offer to UK investment bankers over at HSBC.
Full details are given in the table below, taken from the bank's results statement.
At the same time, RBS is going ahead with its planned reorganization. Henceforth, there will be two investment banking-related divisions: markets and corporate and transaction banking. Corporate and transaction banking will cover trade finance, lending and transaction banking. Markets will be FICC focused and will encompass:
- Currencies –spot FX and currency hedging
- Rates –interest rate hedging, inflation, money markets
- DCM and Credit –execution and market intelligence
- Risk Solutions –corporate risk management solutions
- Emerging Markets –access to non G11 offshore and onshore products
- FI Solutions and Asset-backed Products –balance sheet, capital and liquidity solutions
- Prime Services –prime brokerage, clearing, collateral services, futures
- Investor Products and Equity Derivatives
There will be no more corporate broking, equities, or M&A.
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