Return of bankers’ mega-deals as RBS showers cash on its stars

Royal Bank of Scotland risked causing outrage today after it emerged the state-owned bank is paying high-flying staff as much as it did before the financial crisis struck in 2007.

The bank, 70%-owned by the taxpayer following a £20 billion Government bailout, has offered handsome salaries to recent recruits and handed pay rises to existing staff to stop them moving elsewhere.

The news of the lavish deals comes weeks after the bank was embroiled in a major political row over the £9.6 million pay deal for new chief executive Stephen Hester.

It will infuriate politicians, unions, customers and staff and comes as RBS slashes thousands of jobs around the country following its near-collapse last year.

RBS has filled about a dozen positions in its investment banking and markets operations by offering huge salaries, high commissions and pay guarantees for a number of years. Among those to benefit is Antonio Polverino, a top Merrill Lynch bond salesman recently poached by RBS. Kaushik Amin, who was hired to be chief executive of RBS's commodities trading joint venture with Sempra Energy, was also given a mega-deal.

To keep fixed-income staff, it is thought the bank has elevated pay packages to higher than those seen in 2007 by raising commissions.

RBS declined to comment on how many people it has hired this year or on the size of the pay packages. It said most of the recruits replaced departing staff. Spokesman Steven Blaney said RBS has offered just "a handful" of guarantees.

"We will continue to act commercially, which includes paying our people in line with global peers," he said. "Anything else impacts our ability to attract and retain the staff we need to support our clients and create value for shareholders."

The Government took a 70% stake in RBS by buying shares at an average of 50.5p each. Taxpayers were today sitting on a loss of nearly £5 billion on the £20 billion investment as shares traded up 0.15p at 38.4p.

The public is also out of pocket on its £15 billion investment in Lloyds Banking Group.

The Wall Street Journal today reported that RBS is not the only bank propped up by state to be offering huge rewards to lure stars and reverse last year's steep losses.

Bank of America recently hired a top bonds salesman with a guaranteed two-year deal valued at about $6 million for the first year, while Citigroup offered nearly $2 million in an attempt to recruit a top brokerage executive.

Mark Reilly, a Chicago-based compensation consultant, said: "The state is helping these banks stay in business...so they are essentially offering this compensation using state money.

"This has really been a surprise for other banks, who thought compensation was going to drop."