April 28 (Reuters) - The British government’s decision to block state-controlled Royal Bank of Scotland’s bonus plans puts the bank at a competitive disadvantage, a top Standard Life executive said on the BBC’s Today Programme.
“It weakens its performance, reduces the value of the bank and consequently the amount of money taxpayers receive when the government eventually reduces their stake, i.e. it will hurt taxpayers,” said David Cumming, the fund manager’s global head of equities.
“It was politically expedient but it’s going to damage the bank and damage the taxpayers, so we would not have been in support of that measure.”
Britain blocked money-losing RBS’s plans to pay bonuses worth double an employee’s fixed salary, saying last week that the bank was not performing well enough to justify higher bonuses.
European banks have come under fierce criticism from the public, shareholders and politicians for extravagantly rewarding staff at a time of austerity that was brought on in part by the reckless lending of some financial groups.
RBS and UK Financial Investments, which manages the government’s 81 percent stake in the bank, could not be reached for comment.
Last week, Standard Life led a shareholder rebellion against Barclays’ 2013 remuneration plan but supported the bank’s plan to pay bonuses twice the size of salaries. (Reporting by Richa Naidu in Bangalore; Editing by Dan Grebler)