Britain's Royal Bank of Scotland (RBS) Tuesday announced a drastic cut in bonus payments to staff, following intensive talks with the government on the vexed issue of cash bonuses, dpa reported.
The Edinburgh-based bank, which is nearly 70-per-cent-owned by the taxpayer, said it would slash 2008 staff bonuses by more than 90 per cent to 175 million pounds (249 million dollars).
Last year, RBS paid out 2.5 billion in bonuses for work performed in 2007. For 2008, it had planned to award bonuses totalling around 1 billion pounds.
RBS, which was bailed out by the government last October, is the first leading British bank to cut the controversial payments.
The government of Prime Minister Gordon Brown has insisted that Britain's banks must adopt "cultural change" and move away from "rewarding failure."
The plans announced Tuesday mean that bonuses at RBS will be cut to the "absolute legal minimum," Treasury Secretary Alistair Darling said.
The 175 million pounds will be paid in shares and bonds - not in cash - to meet contractural obligations for some investment bankers, RBS said.
An additional 165 million pounds will be paid out to 80,000 front line staff under a profit-share scheme.
RBS also announced a 2009 pay freeze for senior and US staff, as well as staff in its investment banking arm, the division that has been largely responsible for mammoth losses at the group.
The bank is expected to reveal record losses of 28 billion pounds on publication of its 2008 results later this month.
Last week, the bank's former bosses apologized for contributing to the failure that led to government intervention at the height of the banking crisis last October.