So, RBS Global Banking and Markets isn't being dismembered after all. It's just being obliged to commit hara-kiri.
As of today, anyone earning more than 39k at the Lloyds Banking Group or RBS, will receive none of their bonus in cash.
This isn't a big deal for the cashiers at Lloyds, most of whom earn less than 39k and receive a bonus of less than 1k. However, it looks fairly disastrous for people at RBS Global Banking and Markets, where compensation cost per head in the first half was on a par with Barclays Capital at 100k.
Strangely, RBS bankers don't seem particularly concerned. "It's no worse than last year," says one. "We're expecting to be paid in some kind of paper that's convertible into cash, so it won't really be an issue."
RBS bonuses are paid in June. For 2008, the cash component was reportedly restricted to 25k, with the remainder paid in subordinated debt deferred over three years. Insiders say that, in fact, they received no cash at all last year and are expecting to get the first payout in June 2010.
By comparison - and despite today's revelations - there is still an expectation that a large proportion of 2009 bonuses will be accessible immediately, even if they're not paid in cash.
"This year's payments won't be entirely deferred," says one senior RBS banker confidently. "50% will be paid in immediately accessible paper which is effectively cash [but won't look like it for political reasons], the remaining 50% will be deferred over the following two years."
Another GBM employee confirms this is what people are predicting. An RBS spokesperson said the new bonus arrangements are still being finalised.
Hester has reason to reward GBM staff if he can do so without raising a political lynch mob. The business was responsible for 77% of profits from core RBS operations over the first half of this year.
The bank has resorted to innovative solutions in the past. Earlier this year, we reported that RBS hiked the flexible benefits package for staff in GBM from 11-25k.