Chairman of bailed-out bank faces hard questions over pay deals as he tells AGM of further changes ahead of privatisation
Job losses and branch closures are looming at the Royal Bank of Scotland, the chairman of the bailed-out bank has warned as shareholders accused the bank of having “cosy” and “unsustainable” pay deals.
Sir Philip Hampton told his fifth AGM of the 81% taxpayer-owned bank that £450m would be spent on computer systems after last year’s “big IT failure” when customers were unable to access their accounts.
The meeting was attended by 130 private investors and Jim O’Neil, the outgoing chief executive of UK Financial Investments, which looks after the taxpayer stake. One shareholder asked for reassurances that there were “no more skeletons in the cupboard” after last year’s £390m fine for rigging Libor and IT failures and the continuing mis-selling scandals.
Hampton, speaking at the AGM in the bank’s HQ on the outskirts of Edinburgh, said he couldn’t make any promises but insisted the worst was over at the bank. He said earlier this month the bank would be ready for privatisation next year.
He cleared the way for job cuts and closures – the bank has 1,900 branches before 316 are sold due to EU state aid rules. “We have work to do over the coming years to get our business in the right shape … and that could mean further impacts on employees”.
Stephen Hester, named chief executive when Fred Goodwin was ousted amid the October 2008 bailout, has already axed 40,000 staff, leaving a workforce of 135,000.
Hampton fielded a string of hostile questions, including from private investor Kenneth Cramond, who called for the remuneration committee to resign because it had a “cosy” relationship with the bank. He said the vote on the pay policies was a sham because of the influence of UKFI – the remuneration report was passed with barely any registered dissent – and that if the bank had not paid out bonuses “we’d have turned a profit a year ago”. Some £600m was paid in bonuses last year.
“We can’t go on rewarding failure,” said Cramond. He pointed out that the 2% pay rise for branch staff was higher than those of public workers, who have had a three-year pay freeze.
Another shareholder, Gavin Palmer, interrupted the AGM to hand out a petition to try to set up a new committee on the board.
Campaigners against mining in the Appalachian mountains protested outside the AGM, and in the meeting Paul Corbit Brown urged the board to rethink financing such activities. He held up bottle of Appalachian tap water to complain that it was not fit to drink because of mining activities.
Hester, who waived his 2012 bonus following the IT failures, said it would take a further 18 months to get the bank’s capital ratios “in the final shape that we and our regulators want”.