Royal Bank of Scotland’s pledge to recoup $470m of its fine for rigging interest rates from bankers’ bonuses was criticized by British lawmakers as an exercise in 'creative accounting'.
Bloomberg reports that RBS was fined $612m by regulators in the U.K. and the U.S. last week for rigging the London interbank offered rate and similar benchmarks, and the Edinburgh-based firm said it would recoup the U.S. portion of the penalty by shrinking the bonus pool and clawing back awards from previous years.
CEO Stephen Hester and Chairman Philip Hampton, giving evidence to the Parliamentary Commission on Banking Standards in London Monday, both declined to give lawmakers details of how much the bank had been planning to set aside for bonuses before factoring in the penalty for Libor.
'We weren’t given sufficient confidence that the arrangement for funding the fines from bonuses will do what it says on the tin', Andrew Tyrie, the commission’s chairman, said in a statement. 'This must be more than an exercise in creative accounting. It would be all too easy to artificially adjust a bonus pool, the size of which is yet to be decided'.
RBS paid its investment bankers about $610m in bonuses for 2011, the bank said in February last year. About half of RBS’s bonuses for 2012 can be clawed back, Hampton said.
'We haven’t decided on our bonus pool yet', Hampton said. 'We’ve got to be very clear and public to this committee and elsewhere that we’ll exercise clawback properly', he added.
Hit the link below to access the complete Bloomberg article: