EDINBURGH (Reuters) - Part-nationalized Royal Bank of Scotland (RBS.L) said it needed freedom to execute a five-year recovery plan without excessive interference and vowed to restore dividend payments to help pave the way for a sale of the government’s stake.
A row flared up earlier this year with some politicians attacking the bonus proposed for Chief Executive Stephen Hester, prompting criticism from business groups that there was too much political meddling in the bank, which is 83 percent owned by Britain.
“There are still risks on the horizon and the task of rebuilding RBS has some way to go. It is important for me and the board that the RBS management team is given the support and freedom they need to continue their work to make us safer and stronger,” Chairman Philip Hampton told shareholders at RBS’s annual meeting in Edinburgh.
Hampton said the bank would look to start paying dividends again “as soon as possible,” although most analysts consider such a move to be unlikely until 2015 at the earliest.
“Very few things would give me more pleasure than to return RBS to the dividend list because of all the other things it would say about the business,” he said. “That is our top priority. It would also help the government in terms of selling their shares as well.”
RBS’s pay proposals received overwhelming support from shareholders, however, with 99.31 percent voting in favor of the resolution, including UK Financial Investments, which manages the government’s stake and has 67 percent of the voting rights.
That allowed the bank to avoid the backlash seen in past years and at its rival, Barclays (BARC.L), last month, although some protesters had gathered outside the meeting.
Both Hampton and Hester waived their bonuses earlier this year after politicians from all of Britain’s major parties called on them to refuse the awards amid mounting public anger.
Many Britons are unhappy that bankers, blamed for causing the 2008 financial crisis, have continued to pay themselves generous rewards while thousands have lost their jobs as the country slipped into a double-dip recession.
“I’d like to see them show more restraint (on pay). There never used to be this kind of pay given out by Scottish banks,” RBS shareholder Tom Wilson, 74, told Reuters.
Hampton said he had sympathy with critics of bank bonuses but defended the bank’s own pay proposals.
“I do accept that some people in some organizations have been significantly overpaid in the financial sector in recent years, but I would not say that for RBS,” he said, adding that UKFI had been a “pretty tough taskmaster” on pay.
RBS also faced criticism from the Unite union, which said 28,000 of its members who work in the bank’s retail branches endured pay freezes last year while others in the bank received more lavish rewards.
“We are told by customers that the person or people within RBS who customers trust isn’t Stephen Hester or the executives. It’s the staff in the branches or on the phone who they deal with on a regular basis. So why are 28,000 of us getting a zero pay rise this year?” said an RBS worker who is a Unite member.
RBS paid out 785 million pounds ($1.2 billion) in bonuses and other benefits last year, including 390 million to investment bankers.
Shares in RBS closed on Wednesday at 20 pence, below their nominal value of 25p. Its market capitalization is 12.1 billion pounds, having lost over two-thirds of value over the last two years.
Hampton expressed sympathy for shareholders who had lost “an awful lot of money”.
“I don’t believe that shareholders’ wealth is likely to be restored any time in my life time or some lifetimes beyond,” he said, responding to one elderly shareholder who said he had lost “thousands of pounds”, Hampton said.
Hampton also said the bank was “keeping track” of the debate over Scottish independence but had no current plans to move location. An RBS spokesman told Reuters that RBS was committed to keeping its headquarters in Scotland.
RBS has picked UBS UBSN.VX to help with the listing of its insurance arm, Direct Line, this year, people familiar with the matter told Reuters earlier on Wednesday.
Editing by Dan Lalor and Kenneth Barry