LONDON – Royal Bank of Scotland Group PLC, Britain’s largest taxpayer owned bank, has given “unacceptable” returns to shareholders, CEO Ross McEwan said.
“Change will not happen overnight,” McEwan told investors in Edinburgh today at his first annual general meeting since succeeding Stephen Hester in October. “It has not been a smooth ride” in the past five years, he said.
RBS has created an internal bad bank, merged units and is scaling back its securities unit as it strives to return to annual profitability and help the government reduce its 80 percent stake. The lender made a net loss of 9 billion pounds ($15 billion) for 2013 in its worst full-year results since its taxpayer bailout in 2008.
RBS is “on track” to make 1 billion pounds ($1.7 billion) in savings this year, McEwan said. The bank will target a further 4.3 billion pounds ($7.3 billion) of savings by 2017, he added.
The bank’s compensation policy was supported by about 99 percent of voting shareholders including UK Financial Investments Ltd., which manages the government’s holding in the lender. RBS said in its full-year results it would pay employees 576 million pounds ($981 million) in bonuses for 2013, down from 679 million pounds ($1.2 billion) a year earlier. McEwan has declined a bonus for 2013 and 2014.
The vote comes after shareholders registered protests over pay at U.K. competitors HSBC Holdings PLC, Barclays PLC and Standard Chartered PLC. Barclays, Britain’s second-biggest bank, had a 2013 bonus pool of 2.4 billion pounds ($4.1 billion).
“We have to have competitive pay structures to get top people,” RBS Chairman Philip Hampton told investors at the meeting. “The more challenged the bank is, and this is a very challenged bank, the more you do need the very top talent.”