RBS to pay huge bonuses after £7bn loss

The Royal Bank of Scotland (RBS) is soon expected to announce huge bonus payouts from a £1.3bn bonus

Despite analysts forecasting a full-year loss at the 84-per-cent state-owned RBS, the bank will still hand out enormous bonuses to its investment bankers. RBS is in the final stage of talks after many months of negotiations with the Treasury over how much it can pay staff.

The Treasury is expected to approve the total bonus pool, ahead of the bank's announcement of its 2009 results. This could spark a fresh storm over bonus payments at banks bailed out by tax payers in the recent financial crisis. The trend of banks handing out big bonuses has put pressure on RBS to make the large payouts to stop its bankers being poached by rivals. RBS has lost over a thousand of its top performers in the past one year.

RBS chief executive Stephen Hester has said he will pay "the minimum" he can get away with, even as his own pay package is under scrutiny by shareholders. Before the global financial crisis, investment banks typically distributed 40-50 per cent of net revenues to their staff.