Royal Bank of Scotland is expected to face shareholder attacks at its annual meeting on Wednesday after paying out £3.4bn in bonuses in the past four years.
Executive pay and Scottish independence will be centre stage at the loss-making bank's meeting at its Gogarburn headquarters on the outskirts of Edinburgh. RBS, which is 80% taxpayer-owned after receiving a £45bn bailout during the financial crisis, doled out £1.4bn in bonuses in 2010, with payouts falling to £576m last year, according to the Robin Hood tax campaign, which represents 115 UK organisations including Friends of the Earth and the TUC.
David Hillman of the Robin Hood tax campaign said: "When even a loss-making state-owned bank forks out billions in bonuses to its top brass it hammers home that bankers' pay is still out of touch with reality. Such vast sums could be put to better use tackling poverty and protecting public services. Unfortunately, the government often seems intent on defending the privileged elite in the City rather than ensuring they play a more productive role in society."
After Treasury opposition, RBS had to ditch plans to pay its bankers bonuses twice the size of their salaries, but the government is not stopping the loss-making bank from handing executives payouts of up to 100% of pay. McEwan is in line for £1m a year in "share allowances" that sidestep the EU bonus cap and are also used by other banks. Shareholder group Pirc has advised investors to vote against RBS's pay policy. From 2014, executives will get up to 400% of salary through the share allowance and long-term incentives. "It is disappointing to see that the bank has found a way to circumvent the spirit" of the new EU rules, Pirc said.
McEwan and RBS's chairman, Sir Philip Hampton, are also likely to face questions from shareholders over whether the bailed-out bank would move to England if Scotland votes for independence in September.
Business secretary Vince Cable and Bank of England governor Mark Carney have suggested that RBS would have to relocate to London, sparking fears about 3,000 jobs at its Edinburgh base. An EU rule states banks must be based in the same country as most of their business. In the case of RBS, which owns NatWest and a London-based investment bank, this is England.
RBS has not commented on a possible move but highlighted the risks from a Yes vote in its annual report, saying there could be a "material adverse effect" on its business and prospects and it would also affect its credit ratings.
Shareholders are also likely to quiz RBS's bosses about lending to small businesses.
RBS investors will also vote on whether to remove the dividend access scheme, which gives the government priority over payouts and is seen as an obstacle to privatisation. It will cost the bank £1.5bn to buy itself out of the scheme, but shareholders are likely to back the move. Analysts at Jefferies believe that RBS could reinstate dividends next year, with the float of its US business Citizens under way.
A group of protesters plans to descend on the shareholder gathering to demand that RBS pull its money out of coal. Dressed as bankers, they will be handing out lumps of coal disguised as luxury chocolates ("fossil rochers") and holding placards reading "RBS out of coal". The World Development Movement claims RBS invests more in coal mining worldwide than any other UK bank.
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