Like many of its peers in the banking world, RBS used to make a habit of manipulating Libor (among other things). And, as recent reports suggest, the Royalest Bank of Scotland is probably going to be forced to cough up £300m (and fire a couple execs) to convince the government everyone is very sorry and it won’t happen again. How does the bank, which has not had a money-making quarter since the financial crisis,* plan to come up with the cash? By 1) taking back bonuses that were already paid out to people who were involved in the scandal and 2) reducing everyone‘s bonus this year.
The part state-owned bank is expected to face a worse punishment than the $450 million paid by rival Barclays following an investigation into the alleged manipulation of the London interbank offered rate (Libor) and other benchmark rates, said the source, who declined to be named. RBS plans to set aside over 100 million pounds ($161 million), mostly by reducing bonuses but also by clawing back past bonus payments paid to those implicated in the affair, the source said. Last year, the bank paid its investment bankers bonuses totaling 390 million pounds.
Probably goes without saying that birthday chickens are out until further notice.
RBS to slash bonuses to pay Libor fines: source [Reuters]
RBS Brass In Rate Spotlight [WSJ]
RBS Libor Fine Could Be £300m, Two Executives Under Pressure To Resign [HPB]
*Is there a reason not to just pack it in at this point? What are they trying to prove here?