NatWest Group, the taxpayer-backed financial institution, is to extend its annual bonus pool for the second consecutive yr as rising rates of interest bolster the trade’s profitability.
Sky News has learnt that the lender, which can report its outcomes for 2022 subsequent week, has signed off plans to pay out greater than £350m in bonuses to employees.
The awards, which can be disclosed subsequent Friday, could appeal to controversy due to the federal government’s 45% stake in NatWest and persevering with inflationary pressures that are having a huge impact on Britons’ residing prices.
The Treasury and UK Government Investments, which manages the general public stake in NatWest, should not have a proper veto over the bonus proposals however are thought to have been knowledgeable about them.
One supply mentioned the bonus pool can be considerably greater than final yr’s determine of £298m, however would are available under £400m.
Next week’s determine is predicted to be the most important sum paid out by NatWest in about 5 years, they mentioned, with a £2,000 cap on money bonuses which has been in place since 2008 remaining.
Last yr’s payouts have been materially decreased due to a serious anti-money laundering wonderful imposed on NatWest throughout the course of 2021, that means this yr’s enhance won’t symbolize a significant comparability.
UK taxpayers pumped £45.5bn into what was then the Royal Bank of Scotland Group to maintain it afloat in 2008 and 2009 as the worldwide banking trade teetered on the point of collapse.
During that interval it reported one of many greatest losses in British company historical past.
The financial institution’s bonus awards have steadily fallen since then as RBS scaled again its presence in high-paying funding banking markets and amid political strain to curb employees payouts.
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NatWest is often a ‘again marker’ in relation to banking sector pay, that means its bonus pool will once more be materially lower than that of British-based friends reminiscent of Barclays and HSBC.
It gave junior workers a £1,000 one-off fee final yr, whereas the vast majority of its employees on the two lowest grades within the firm will get pay rises of at the very least 7% in April, based on beforehand introduced plans.
Rising rates of interest have aided the corporate’s incomes energy over the past 12 months, with analysts forecasting that it made £5.1bn in working revenue in 2022, towards £3.8bn the yr earlier than.
The financial institution, run by Dame Alison Rose, has additionally seen its share worth proceed to get well, and now has a market capitalisation of near £30bn.
Significant state stake
While taxpayers proceed to face steep losses on the unique price of rescuing NatWest, the state has benefited from elevated capital returns.
Figures revealed on the time of NatWest’s third-quarter outcomes confirmed it had handed £3.3bn to shareholders this yr within the type of a £400m interim dividend, a £1.75bn particular dividend and a £1.2bn directed buyback of shares.
Since the start of 2022, the federal government’s stake has handed the milestone of falling under 50% for the primary time since 2008.
NatWest has repeatedly mentioned that it’s well-positioned to proceed supporting clients via the cost-of-living disaster and any UK recession which happens.
The financial institution’s steadiness sheet has been considerably strengthened by its improved profitability, with its core fairness tier-one ratio – a measure of its power – now among the many healthiest of the UK lenders.
The Treasury has outlined plans to promote the remainder of the taxpayer’s stake in NatWest by about 2025.
NatWest declined to touch upon Friday.
Source: information.sky.com”