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Is the government ruining the Royal Bank of Scotland?

There are growing concerns today that government intervention with regards to Royal Bank of Scotland bonuses could see a mass resignation from the board of directors and an exodus of the company's top staff. The government has threatened to take control of the £1.5 billion bonus fund although Royal Bank of Scotland directors believe this would be a disastrous move which could weaken the position of this once highflying bank even more. So what next?

The UK government is in a very tricky situation because in public it has been ridiculing the salaries and bonuses of various bankers while behind-the-scenes it is well aware that bonuses do attract the best people in the financial sector. If the government was to water down or even reject the payment of bonuses this year it is likely that the high income producing staff at Royal Bank of Scotland would look to move elsewhere. When you consider that other banks in the UK and overseas do not have the same restrictions as the Royal Bank of Scotland there will be no shortage of takers for these disappointed financial highfliers.

This is turning into a nightmare situation for the UK government and one which could prove very detrimental to the value of UK taxpayer shares in Royal Bank of Scotland

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