No bonus until 2015 for new RBS CEO

Written By Unknown on Jumat, 02 Agustus 2013 | 16.50

2 August 2013 Last updated at 04:50 ET

The incoming chief executive of Royal Bank of Scotland will take no bonus for his work in the role this year or 2014.

Ross McEwan, 56, who is currently head of the bank's retail arm, will take up the position in October with a £1m salary.

The announcement came as RBS announced pre-tax profits of £1.4bn in the first half of the year.

This was up from a loss of £1.7bn the year before.

However, the bank's shares took a hit as investors voiced their disappointment there had not been further improvements, pushing shares down 5% in early morning trade.

'Safe and strong'

RBS chairman Sir Philip Hampton said running the bank was among the most challenging jobs in the business world.

"Five years on from its rescue, RBS is now a safe and strong bank," he said.

Continue reading the main story

"Start Quote

McEwan's remuneration scheme implicitly confirms what the chancellor said in his annual speech to the City at the Mansion House, which is that the privatisation of taxpayers' 81% stake in RBS is years away"

End Quote

"Our focus is now on building a really good bank for our customers and shareholders, returning the bank to private ownership, and playing our full part in supporting the UK economy."

The bank said Mr McEwan, who joined RBS from Commonwealth Bank of Australia in September 2012, would not take a bonus for 2014 or for the remainder of 2013.

Instead of a pension he is set to receive a cash sum each year equivalent to 35% of his salary.

Chancellor George Osborne welcomed the appointment, saying Mr McEwan had impressed with his vision of RBS as a strong, UK-centred corporate bank.

'Lacklustre' figures

In the first half of the year the bank reported a group operating profit of £1.7bn, up 5% from the first half of 2012.

Continue reading the main story

Who is Ross McEwan?

  • 56-year-old New Zealander
  • Joined RBS in September 2012 as chief executive for UK Retail
  • Previously group executive for Retail Banking Services at Commonwealth Bank of Australia
  • Married with two children

But the bank was forced to set aside another £185m pounds to compensate customers for the mis-selling of payment protection insurance, taking the bill for mis-selling to £2.4bn.

BBC business editor Robert Peston said the numbers showed the bank was much stronger than it was a few years ago, particularly in terms of the key measure of capital ratios.

"However, the profit performance isn't as impressive if you strip out funny accounting niceties," he said.

"Certainly a little bit of growth this year but that is the contrast between RBS and Lloyds - yesterday we saw significant profits growth at Lloyds but we are not yet seeing that at RBS.

"There is no doubt its retail banking operations in the UK can be a powerhouse again, but the row with the Treasury over whether the investment bank should be expanded or slimmed down has detracted fairly significantly from its operating performance."

Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said RBS' first half figures were "lacklustre" and unlikely to alter investor perception of the stock as one to avoid.

"The general view is one of impatience in awaiting the RBS full recovery story when there are perceived to be better opportunities elsewhere in the sector," he said.


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