RBS Chief Considered Resigning Over Bonus Row

Published February 8, 2012 10:54AM (EST)

LONDON (AP) — The chief executive of Royal Bank of Scotland said Wednesday that he had considered resigning over the political controversy surrounding his nearly 1 million pound ($1.6 billion) bonus.

"I came to the conclusion that I thought it would be actually indulgent for me to resign, and that what I ought to do was to draw, if you like, on the reserves of strength I have and try and make RBS a success," Stephen Hester said in a BBC radio interview.

Hester said the public and political criticism had complicated his task of shoring up the bank, which was rescued during the credit crisis of 2008 with 45 billion pounds ($72 billion) of taxpayers' money. The British government now owns 82 percent of RBS. Hester was brought in soon after the government rescue to turn the bank round.

Hester, who draws a yearly salary of 1.2 million pounds, decided not to accept a bonus of shares worth 963,000 pounds (nearly $1.6 million) after the award was criticized by senior government officials and politicians.

"I took the judgment that it was going to be damaging for RBS to stay in the intensity of the spotlight that we had got into, and in the end, the job that I was asked to do three years ago when RBS was collapsing was about recovering this bank and about helping it to succeed, and that's what I really want to accomplish."

RBS was also caught up in another controversy last week when Fred Goodwin, Hester's predecessor and the man considered responsible for the bank's near-collapse, was stripped of the knighthood he was awarded in 2004.

Hester professed "great sympathy and understanding" for people concerned about the high rewards in the banking industry, but said that was a "societal issue" and a matter for politicians.

"When I was asked to take on this job three years ago, I had to replace the whole senior management team of RBS," Hester said.

"We had to go around the world looking for the best people, not just people to run a bank well, but people to defuse the biggest time bomb in history in terms of bank balance sheets.

"Those people are doing a good job. I think they deserve recognition. If they do a good job, it's our task to make sure that there is a connection between the job that the people are doing and, of course, how they get treated," Hester said.

Treasury chief George Osborne said on Tuesday that the government had no problem with rewards for success.

"Of course rewards for failure are unacceptable — and those who believe in the free market are the first to say so, but a strong, free market economy must be built on rewards for success" Osborne said to the Federation of Small Businesses.

"There are those who are trying to create an antibusiness culture in Britain — and we have to stop them. At stake are not pay packages for a few but jobs and prosperity for the many," Osborne said.

By Salon Staff

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