Royal Bank of Scotland - the spin now the sin!
Less than 24 hours after the UK government announced a 90% reduction in bonuses to be paid to Royal Bank of Scotland staff we are starting to see the full picture with regards to the eventual bonus package. While the initial request for a £1 billion bonus fund was turned down and replaced by a £175 million cash alternative, there are rumours today that as much as £600 million in Royal Bank of Scotland bonds may be issued to employees as part of their package. It appears that bondholders will be locked in to the investment for a limited period although it does somewhat overshadow the government spin of yesterday.
When the new deal was announced yesterday there was little mention of deferred bonuses in the official press briefing although rumours did start to surface even yesterday. Taxpayers will be dismayed that after investing billions upon billions of pounds into the company, up to £800 million could effectively be flowing out of the door straight away, despite the fact the company is set to announce the largest loss in UK banking history.
The ironic icing on the cake for many taxpayers is the fact that the initial investment of billions of pounds is now worth a fraction of the amount ploughed in after the recent collapse in the share price.
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