Lloyds And RBS To Replace Staff Bonuses With Loans

Tue, 21 Apr 2009

Lloyds Banking Group and Royal Bank of Scotland (RBS) Group are to offer loans to members of staff who have had their bonuses postponed for up to three years.

RBS has announced there will be no discretionary cash bonuses for its employees this year as it seeks to balance staff reward with the long-term interests of the bank's shareholders, which include UK taxpayers who own 70 per cent of the bank .

However, to ensure those relying on their bonuses are offered financial support, awards will be paid in subordinated debt which will be deferred over three years.

The loans will be subject to claw back if performance targets are not met and any borrowing will incur interest charges similar to those charged on an RBS secured loan .

An RBS spokesperson explained: "To allow staff to manage their finances we have already said that we intend to allow staff to borrow against a portion of their deferred award, but we have yet to complete details on how this will work."

In a similar move, Lloyds Banking Group will be offering a commercial loan scheme for employees receiving deferred bonus payments in the form of Lloyds Banking Group subordinated debt .

A spokesperson for the bank said the loan scheme does not apply to the vast majority of staff who have already been given their cash bonus payments.

"The loan scheme is voluntary, will be run on commercial lines and will only be available on a defined proportion of the bonus," they added.
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