Firm Said To Wave White Flag Over Bonuses

The Financial Times reports that Royal Bank of Scotland has signalled that it will 'succumb' to pressure from the UK government to keep its 2009 bonus pool broadly in line with last year.

The bank had originally allocated some $2.5bn for the bonus pool, which is around 50% up on last year. The UK government, however, is putting pressure on the bank to make flat payouts this year. An RBS insider told the newspaper that pay-outs this year would now be 'at the low, low end of the scale'.

In the meantime, The Evening Standard quotes a City lawyer who says that some RBS bankers may be entitled to sue the bank in the event that the government blocks or reduces bonuses. Jonathan Mansfield, a partner in employment law specialists Thomas Mansfield, told the newspaper: 'While some contracts will include a discretionary bonus, if bonuses are in the contract and are linked to reaching a certain target, then it would be very difficult for any employer to refuse to pay out'.

UK Prime Minister Gordon Brown, however, has said that RBS bankers will not be disadvantaged on bonuses, because every firm will be required to follow the G20 compensation guidelines.

And Bloomberg reports that UK City Minister Lord Myners has slammed institutional shareholders for keeping quiet on the subject of bonuses. Myners told BBC Radio 4 Thursday that: 'They've remained completely silent on these issues', and suggested that shareholders need to make their objections known.

Finally, The Financial Times reports that it is increasingly likely that staff over at Goldman Sachs, who are thought to be due to receive record bonus payouts this year-end, will get the majority of the bonuses paid in deferred equity. Senior executives are likely to receive all their 2009 bonuses in restricted stock.

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