One shareholder strips to underpants in protest over pay
Consumers will pay more for banking services as a result of the proposals by the independent banking commission, the chairman of Royal Bank of Scotland claimed at a rowdy annual meeting dominated by questions about bonuses and funding of tar sands projects.
Sir Philip Hampton told the 200 or so shareholders at the bank's head office near Edinburgh airport, that the payouts for bankers were "hard to justify objectively".
The chairman, parachuted in after the October 2008 bailout, insisted the bonuses were low relative to rivals.
Criticism from the private investors did not affect the vote on the remuneration report as UK Financial Investments, which controls the 83% taxpayer stake and has 70% of the votes, backed all the resolutions while seeking "assurances" on one element of the proposed pay deals.
Stephen Hester, brought in to turn the bank around after Sir Fred Goodwin's departure, is on course for a £7.7m pay deal which Lord Oakeshott, the Liberal Democrat peer who resigned over the Project Merlin deal with the banks, calculated costs each taxpayer 21p. Ken Cram, a private shareholder, was met by a loud round of applause when he accused board members of having an "inflated idea of their own importance".
He said: "You're not irreplaceable, you're paid too much. Can you and Stephen Hester answer how you can justify your bonus when frankly customer service is going down the toilet?"
Another shareholder said he found the bonuses paid out by the bank to be "really obscene to the degree of greed and corporate theft."
"You should not be paying yourselves anything until the debt is paid off to the government and to the people," he said.
Hampton said the recovery of the bank – which reported a record £24bn loss for 2008 – was "clearly under way" and that every penny on the share price added £900m of value to taxpayers.
Shares in RBS will not be sold off until after the government responds to the independent banking commission, chaired by Sir John Vickers, in September. The commission's interim report is calling for banks to ring fence their retail arms. Hampton said the bank would "have to work hard to mitigate the impact of additional costs" from the commission and "we will, of course, do everything we can within our business to absorb these through control of our own expenses base".
"However, it seems inevitable that customers and shareholders will be impacted by additional costs. There is an important balance to be struck by policymakers," Hampton said.
Shareholders attending the meeting were greeted by Kit Fraser, standing for Ban Bankers' Bonus party in the Scottish election, stripped down to his underwear to protest about pay. The largest number of protesters were pretending to drink oil dressed as bankers in bowler hats, supporting members of indigenous Canadian communities who protested about the £5.6bn lent to companies involved in exploiting Alberta's tar sands. They were able to question the board as proxies.
Hampton also announced a final step in the integration with Dutch bank ABN Amro – one of the causes of RBS's near-demise – by a decision to transfer business from a Dutch legal entity to RBS plc.