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Royal Bank of Scotland staff set to sue over bonus scheme

Tens of thousands of staff at the Royal Bank of Scotland are set to sue the government after the company's bonus scheme was slashed under pressure from the Chancellor Alistair Darling. They claim that while the bonus scheme had initially been "at the discretion of the board" a letter from Sir Tom McKillop in 2007 had guaranteed a 10% bonus from then onwards. If this guarantee is proved to be legally binding then the government has a serious problem and taxpayers again look set to foot the bill.

The banking bailout is turning into something of a nightmare for the UK government with the forecast increase in liquidity yet to appear and serious legal and moral issues regarding various banking bonus packages. Initially there had been a request for a £1 billion bonus scheme to cover staff payments at RBS but this was then watered down to a £175 million scheme with upwards of £600 million in Royal Bank of Scotland bonds to be deferred. If the legal action is successful, and there is no reason to believe it will not be, not only will UK taxpayer be forced to shell out hundreds of millions of pounds in extra bonuses but also foot the bill for legal costs.

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