RBS Chief Says Bonus Controversy Harmed Bank

Published February 8, 2012 9:27AM (EST)

LONDON (AP) — The chief executive of Royal Bank of Scotland said Wednesday that the controversy which led to his decision to refuse a big bonus was damaging for the part-nationalized bank as it tries to hire the right people to restore its fortunes.

Stephen Hester said in a BBC radio interview that the public and political criticism had complicated his task of shoring up the bank, which was rescued during the credit crisis with 45 billion pounds ($72 billion) of taxpayers' money. The British government now owns 82 percent of RBS.

Hester 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," said Hester, who also draws a salary of 1.2 million pounds a year.

RBS was also cast in an unflattering light last week when Hester's predecessor, Fred Goodwin, was stripped of the knighthood he was awarded in 2004, when the bank was riding high.

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 is our task to make sure that there is a connection between the job people are doing and how they get treated," Hester said.

By Salon Staff

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