The Labour Party Conference began yesterday, and attendees have been talking mean about bonuses.
In particular, Alistair Darling has been talking tough on 'automatic bonuses'. This may be hot air, but could equally mean either guarantees or bonuses paid out in the absence of favourable peformance.
Darling's pugnacity comes ahead of a meeting with Lloyds, Barclays and HSBC, in which he's expected to ask them to act immediately and implement the rules agreed by the G20 ahead of the next bonus round.
Given that these rules include the requirement that 40%+ of bonuses are deferred for at least three years, awards such as the 7m one year guarantee allegedly given by RBS to Antonio Polverino earlier this year may require restructuring.
Although Commerzbank's experience with Dresdner suggests reneging on contractual agreements with employees is a bad idea, one employment lawyer says it might be possible to make retrospective alterations if the law changes.
"Banks could argue that an overriding law trumps their contractual obligation," says James Davies at Lewis Silkin. "Bankers whose contracts are changed could then argue that their human rights are being breached, but I suspect that would fail."
RBS declined to comment on whether it foresees making any alterations to its compensation policy following Darling's speech.
An RBS insider was, however, keen to point out that they're ahead of the game when it comes to compensation reform, and already have deferrals, clawbacks, and restricted cash payments in place.
Possibly as a result, as Stephen Hester admitted earlier this year
that RBS was having problems retaining existing staff and attracting new ones. Recruiters say RBS is hiring across rates, FX, and sales and that Polverino has brought across a handful of people from Merrill - mostly on one year guarantees.
The bank's also rumoured to have given retention-related guarantees to some senior staff. These could also prove controversial under the G20 rules. However they're said to comprise the subordinated debt which RBS paid people with for 2008. This is deferred for two years and may prove more acceptable than Polverino's payout to the taxpayer at large.