State-backed NatWest Group hikes bonus pool to £300m

The taxpayer-backed bank NatWest Group is to hand out close to £300m in bonuses last year as the government edges closer to relinquishing majority ownership of the lender it rescued from collapse in 2008.

Sky News has learnt that NatWest‘s board is proposing to pay just under £300m in bonuses to staff, the first time it has pushed through a year-on-year increase in the pot since its bailout.

The Treasury continues to own a 52% stake in the lender, but is expected to reduce its interest to below 50% this year as it drips shares into the market through a trading plan that was announced last year.

One insider said that NatWest’s bonus pool would be over 40% bigger than the £206m paid out in 2021, but pointed out that the figure was still below the pre-pandemic pot of £305m that was awarded in 2020.

Nevertheless, the increase could raise awkward questions for the bank’s board and the government given the state’s continued holding and the timing of the payouts given inflationary pressures affecting Britons’ cost of living.

The Treasury is notified annually about NatWest’s pay plans, although it does not typically intervene in a meaningful way.

Alison Rose, NatWest’s chief executive, plans to accept an annual incentive award that the bank’s board has agreed to pay her, according to another source.

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Last year, Ms Rose was not considered for a variable pay award having announced her decision shortly after the onset of the pandemic.

She also gave up 25% of her fixed pay for the year.

NatWest has not paid annual bonuses to executive directors for a number of years after running into regular political controversy about such awards under Stephen Hester, Ms Rose’s predecessor-but-one.

The bank will also retain a £2000 cap on cash payouts that has been in place since Royal Bank of Scotland was rescued with £45.5bn of public money during the global financial crisis.

The disclosure of its annual bonus pool, which will come alongside its full-year results later this month, will come against the backdrop of an improved financial performance.

NatWest’s operating profit for the first nine months of 2021 was £3.6bn, putting the company on track to record one of its few annual profits since 2008.

2021 was not a year without controversy for NatWest, however, with a £265m fine imposed on it in December for money-laundering failures.

It was also fined $35m after pleading guilty to fraudulent behaviour in the US Treasury and bond markets.

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It has been a bumper year so far for bonuses in the banking sector, with Wall Street banks in particular awarding some of their biggest payouts in more than a decade.

Last year’s mergers and acquisitions frenzy helped to inflate investment banking fees, with the other major UK banks – notably Barclays and HSBC – expected to report sharply-higher payouts.

A NatWest spokesman declined to comment.

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