One of the City's biggest fund managers has warned that the government's decision to block Royal Bank of Scotland's bonus plans would put the bank at a competitive disadvantage.
David Cumming, global head of equities at Standard Life, said: "It weakens its performance, reduces the value of the bank and consequently the amount of money taxpayers receive when the government eventually reduces their stake, ie it will hurt taxpayers."
The government has prevented RBS paying bankers bonuses up to double their salary, after Brussels capped payouts at 100% of salary unless shares give their approval for 200%. Cumming said on the BBC's Today Programme: "It was politically expedient but it's going to damage the bank and damage the taxpayers, so we would not have been in support of that measure."
Even though the government said UK Financial Investments, which looks after the stakes in the bailed-out banks, would not back such a vote on higher bonus ratio, it is not blocking the bank from paying "allowances" to its top staff as another way round the bonus cap. Next year Ross McEwan, the RBS chief executive, will receive allowances worth £1m – the same size as his salary.
Standard Life spoke out at Barclays annual meeting last week when it said had voted against the remuneration report but supported the plan to pay bonuses twice the size of salaries.
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