Bonus-ban bankers keen to jump ship

LONDON - Royal Bank of Scotland boss Stephen Hester yesterday insisted that staff would enjoy "a significantly improved position" in terms of bonuses compared with last year, as headhunters reported a deluge of calls.

Hester wrote to staff after being banned from paying cash bonuses to anyone earning more than £39,000 ($90,000) a year as a result of a second taxpayer-funded bailout.

But he said: "For almost all of our employees we have delivered a significantly improved position from the approach that we adopted for performance year 2008. The overall deferral period is shorter and most people will get more of their deferred award released sooner."

On Wednesday he said the restrictions made the bank "a sitting duck" to rivals who face fewer stringent restrictions.

At a hearing before the Treasury Select Committee yesterday, UKFI - which oversees the Government's stakes in the banking sector - admitted that it was "walking a tightrope" by seeking to limit bonus payouts at recovering banks while trying to stop talented staff leaving.

John Kingman, the outgoing chief executive, said: "We have to walk this tightrope in which we reform the cultures ... but we cannot afford to be in a position where the banks lose so many people that we start to lose serious value."

That was confirmed yesterday by a headhunter, who asked not to be named. "We've had an awful lot of calls," they said. "There is demand for investment banking talent out there at the moment. It's going to be a busy time for us."

Kingman insisted that UKFI's holding in the banks over time would be sold at a profit and he expected there to be "healthy interest" in the assets to be sold by RBS, Lloyds and state-owned Northern Rock.

- INDEPENDENT