The lender, in which taxpayers own just under 45%, has put up plans to pay out much more than last year’s £298m bonus pool.
NatWest Group, a bank backed by the government, will enhance its annual bonus pool for the second consecutive year. As higher interest rates boost the profitability of the business.
The lender, which will report its 2022 earnings next week, has approved bonuses of around £350 million.
The awards, which will be announced the following Friday, may generate controversy due to the government’s 45% ownership in NatWest and ongoing inflationary pressures that have a significant influence on the cost of living for Britons.
Treasury and UK Government Investments, which administers the public share in NatWest, do not have a legal veto over the incentive ideas, although they are said to be aware of them.
One source says the bonus pool will be higher than last year’s £298 million but less than £400 million.
The £2,000 cap on cash incentives that have been in place since 2008 is set to remain in force. The amount expected to be paid out by NatWest next week is expected to be the largest in about five years.
Due to significant anti-money laundering penalties imposed on NatWest during the course of 2021. Last year’s rewards were significantly decreased, therefore this year’s rise will not be comparable.
In 2008 and 2009, UK taxpayers saved the Royal Bank of Scotland Group by injecting £45.5bn.
During that time, it posted one of the largest corporate losses in British history.
Since then, the bank’s bonus payments have steadily decreased as RBS has reduced its involvement in high-paying investment banking sectors and political pressure has increased to limit staff compensation.
NatWest is traditionally a “back marker” when it comes to pay in the banking industry, therefore its bonus pool will once again be far less than that of British-based competitors such as Barclays and HSBC.
Last year, it provided junior employees a one-time payment of £1,000, and in April, the bulk of its employees in the two lowest categories will receive salary increases of at least 7%, according to previously announced plans.
Analysts predict that the corporation earned £5.1bn in operating profit in 2012, up from £3.8bn the previous year. As a result of rising interest rates over the past 12 months.
Dame Alison Rose’s bank’s share price has also recovered, reaching close to £30bn.
The state has benefited from rising capital returns as taxpayers continue to lose money on NatWest’s bailout.
NatWest distributed £3.3bn to shareholders in the form of a £400m interim dividend, a £1.75bn special dividend. And a £1.2bn directed buyback of shares, according to third-quarter financial reports.
Since the start of 2022, for the first time since 2008, the government’s interest has dropped below 50%.
NatWest has frequently said it is prepared to help consumers through the cost-of-living crisis and a UK recession.
Financial core equity tier one ratio – a measure of its strength – is currently among the healthiest among UK banks.
By 2025, the Treasury intends to sell the remainder of the taxpayer’s interest in NatWest.
Friday, NatWest declined to respond.
