By
Ben Laurance
Last updated at 11:59 PM on 9th January 2012
Windfall: John Hourican, chief executive of RBS is set for a £4.3m bonus with 5,000 members of staff set for the axe
A senior executive at taxpayer-controlled Royal Bank of Scotland is in line for a multi-million pound bonus – as the bank prepares to axe up to 5,000 jobs.
John Hourican, head of RBS’s troubled investment banking division, is due to receive a £4.3million windfall in April.
The payout will be acutely embarrassing for Prime Minister David Cameron. It comes just a day after he attacked bosses who accept huge salaries and bonuses when their companies are struggling.
The price of shares in RBS, which is 83 per cent owned by the taxpayer after the Government bailed it out in 2008, has halved over the past year.
But Mr Hourican, 41, who has been head of global banking and investments since 2008, could be eligible to receive more than 21million shares in April under a bonus deal agreed three years ago.
He was awarded 29million shares and options as part of an initiative to restructure the group following its disastrous tie-up with Dutch lender ABN Amro.
With RBS shares changing hands at just over 20p last night, the windfall would be worth £4.3million.
RBS said yesterday that Mr Hourican’s share award was dependent on him meeting ‘performance targets’ – but refused to say what they were. Unite, the union that represents junior staff at RBS, launched a fierce attack on the payout to Mr Hourican.
Its national officer, David Fleming, said: ‘Yesterday, David Cameron toured the television studios positing as a prime minister tough on excessive pay rewards.
‘Today, we see the government-backed bank completely ignoring his pleas.’
Intervening: Fresh calls from the government to stop large bonuses
Downing Street yesterday tried to deflect the criticism of big payments at RBS, saying it was the responsibility of UK Financial Investments, the government body which holds taxpayers’ stakes in banks that had to be rescued.
The Prime Minister’s spokesman said: ‘UKFI is set up as the shareholder and is very clear that it will make sure that pay at RBS reflects performance.’
UKFI would not comment on whether it would intervene, but employment experts think it will be difficult for RBS to trim Mr Hourican’s payout unless he can be shown to have failed to meet the targets.
Action: Prime Minister David Cameron is working to end such grand scale rewards for top bankers
Details of the huge share award come as RBS’s investment banking division is poised to axe thousands of jobs. Confirmation of the latest round of cutbacks is expected within days.
Mr Hourican, who was educated in Ireland and started his accountancy career in Dublin, is in charge of that troubled investment banking business, which the group is trying desperately to shrink by selling operations and axing staff.
The bank has appointed merchant bank Lazards to try to find a buyer for Hoare Govett, the stockbroker inherited as part of RBS’s takeover of ABN Amro, the catastrophic deal masterminded by Sir Fred Goodwin.
This week’s expected round of job cuts is likely to be only the first of many. It is thought that RBS, which has already cut more than 20,000 UK jobs, could announce further reductions.
In the first nine months of 2011, profits for RBS’s investment banking division were 40 per cent lower than a year earlier. Mr Cameron vowed at the weekend that shareholders should be given the power to veto executive pay packages.
Lord Oakeshott, who was Treasury spokesman in the House of Lords for the Coalition until a year ago, said: ‘Where a business has clearly failed and is being run down, you would not expect the person in charge to be receiving millions in bonuses.’
He added: ‘This is exactly the sort of case where Cameron should stop talking in generalities. This is the most glaring failure of corporate governance…he is now jumping on the bandwagon of pay in the banks.’
Lord Oakeshott parted company with the Government after describing efforts to force banks to lend to small and medium-sized businesses as ‘pitiful’.
Attention is now likely to focus on RBS chief executive Stephen Hester. For 2010, he received £1.3million in salary, plus a £2million bonus.
On top of that, he was awarded shares under an ‘incentive’ plan. At their current rock-bottom price, those shares would be worth just over £2million.
RBS said yesterday that its ‘remuneration committee’ – the group of non-executive directors who agree payouts to executive directors – has not yet decided what Mr Hester will get for 2011.
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“RBS boss set for a £4.3m bonus as bank plans to sack up to 5,000 staff”. And the sheeples of this once great nation put up with this ludicrous increase in inequality, falling standards, poor and greedy directors and managers, and rising levels of unemployment as a few ‘fat cats’ get even fatter.
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How long must this go on?. Cameron says he’s working to stop these obscene payments. When will his work be finished? Never I suspect !!!!!
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Does Mr Hourican thinks he deserves this ‘bonus’. If he does then he has established himself as, as best, disreputable. If not, then he must turn it down regardless of any agreement as both parties would have consensus. If Hourican moral minded…. or not?
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He looks much older than 41. Early 50’s at least!
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Another Fred the Shred, no morals, this bank does know how to rub your nose in the muck.
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NO NO NO NO NO NO NO NO NO buy back your shares from the UK taxpayers.
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Its immoral….
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They really don’t care at all do they?
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ANY IDIOT CAN CUT STAFF
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ANOTHER CAMMY VOW IN THE PIPELINE…..
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