Complete Finance Blog

It has been revealed that a significant number of Royal Bank of Scotland staff, who will have their bonus payments limited in the short to medium term, are turning to headhunters to try and find alternative employment away from the group. Chief executive Stephen Hester has made a direct plea to these members of staff looking elsewhere and suggested that the situation will improve once the recession is over and the banking industry is on a firmer footing.

The problem which the UK government has is the fact that non-state-controlled banks will still pay relatively high bonus payments to their staff although the likes of Lloyds bank and Royal Bank of Scotland are under pressure to rein in their bonus payments. As a consequence the overall value of Royal Bank of Scotland could be reduced somewhat if key personnel are persuaded to go elsewhere leaving the company short of high calibre staff, who have in the past helped the company to grow.

If there is a mass exodus of staff then it is likely the UK government will struggle to sell on its significant stake, which could top 80% after the forthcoming fund-raising, until the company is back on a firm growth path. There is a chance that the UK government, while focusing upon the short term issues, could reduce the longer term profitability and value of Royal Bank of Scotland.

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