RBS-linked Traders’ Bonus Pool of $40m Could Hasten Fresh Tax
Monday, December 14, 2009 20:19
A handful of senior traders in a RBS joint venture are set to share a bonus pool of more than $40 million this year.
Details of the payments are likely to provoke new anger about pay in the financial sector. The Government has been trying desperately to prevent a possible bumper bonus round this year and may use today’s Pre-Budget Report to announce a tax on bonuses.
Rumors swept the market that traders were the market that traders were aggressively short-selling the bank’s stock amid fears of a punitive bonuses tax, which could lead to an exodus of investment bankers from the state0controlled RBS.
Managing directors in RBS Sempra Commodities, which is based in the US, may receive about $5 million each this year. The majority of its traders are based in Stamford, Connecticut. Last year the business paid out $614 million in staff costs. For the nine months from when it was set up on April 1 until December 31 it made pre-tax profits of $691 million on revenues of $1.4 billion.
According to accounts filed at Companies House, key management at RBS Sempra Commodities shared $46 million in 2008. The group is thought to include between ten and 20 people out of its 1000 employees.
RBS Sempra Commodities is among the businesses that the bank must sell as part of its state aid settlement with the European Commission. The Government is particularly keen for RBS to offload the business due to its large exposure to high-risk commodities trading and due to the huge bonuses it paid out last year.
The situation echoes Citigroup’s sale of Phibro, its energy-trading business, to avoid a showdown with the US Government over a proposed $100 million pay package for Andrew Hall, the Phibro chief executive. Citigroup received $45 billion in emergence funding from the US Government to keep it afloat after the credit crunch.
The bonus pool for RBS Sempra Commodities is in addition to the £1 billion pot the Edinburgh-based bank has reserved for bonuses in its main business this year.
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