RBS tells Treasury: no mass resignations. But the row isn’t over

The RBS Chairman Philip Hampton has been in contact with the Treasury and reassured it that there is no threat of mass resignation by the board.

The Treasury says it has also been reassured that “no legal advice has been taken” by the RBS board. Peace in our time? Not yet.

I understand from a City source close to all this that the RBS board has indeed been advised that they may have to resign if they can’t say, hand on heart, that they are acting in the interests of all the shareholders.

They may well not “take” this advice, and clearly don’t sound keen on the idea right now, but the advice was given.

This row could not be more toxic. Bonuses are hot politics, the government wants to be on the side of the voters.

It sounds, on the basis of yesterday’s Prime Minister’s Questions, as though it might be crafting an entire political strategy around turning some fiscal guns on the rich few at the top.

It’s using powers written into the agreements that bailed out RBS and insured its toxic debt to justify getting involved in the size of the bonus pool.

But in the City they say this is a betrayal of what UKFI, which runs the government’s bank interests on behalf of the country, was supposed to be about.

The government, they say, is behaving as if it had gone for the nationalisation option, not the option of arms-length management on commercial grounds with a view to returning the bank to the market ASAP.

The RBS board, I am told, believes that traders are the mercenaries of the City, who will walk if the rate for the job is better next door.

Who will win? There will be a fudge to some degree, but I suspect RBS will not get the bonus pot it wants.

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