RBS' staff bonus rush wipes £1bn off shares

RBS' share price was sent tumbling yesterday as workers rushed to offload a swathe of bonus shares in exchange for cash.

Of 650m shares awarded to employees on Monday for their performance in 2009, more than half were half were sold off immediately.

Staff had the choice to take their pay-out in stock, but the majority chose to sell out immediately for a windfall of about £140m, according to the Daily Mail.

The news helped send RBS shares tumbling 1.78p or 4.4p to a seven-month low of 38.5p, wiping more than £1bn off its market value.

After Lloyds' shares closed 1.235p lower to 47.1625p because of the mounting eurozone debt crisis, taxpayers were running a loss of nearly £15bn on their combined stakes in the two banks.

The shares RBS is now selling were created under the 2009 pay plan, which set aside £1.6bn for staff across the bank, with payments to be spread over three years.

Of this, around £1.3bn was earmarked for workers at RBS's investment banking wing.

Because the majority of workers want to take the money, RBS is dumping 355m shares on their behalf in the stock placing. Staff are holding on to around 300m shares.

Although RBS is barred from paying any cash bonuses of more than £2,000 under the terms of its bailout, the latest windfalls could see the bank's pay policies come under renewed scrutiny.

Chief executive Stephen Hester earlier this month admitted that bonus deals for staff have been inflated by the raft of government guarantees underpinning the bank.