Sky News reported that the state-backed lender NatWest Group has informed the Treasury that it wants to hand out more than £200m in staff bonuses for 2020.
It will be roughly a third lower than that of the £304m in 2019 and its smallest pool since the bailout of Royal Bank of Scotland more than 12 years ago. However, it is still a huge sum of money, especially as millions have struggled during the pandemic.
Last year, the UK’s biggest banks cancelled dividends worth a total of more than £7bn amid pressure from the Bank of England.
It is believed that Barclays is also finalising plans to hand out a substantial annual bonus to boss Jes Stanley
Barclays has its remuneration committee this week, however, one adviser told Sky that Stanley was likely to be awarded between £500,000 and £800,000 on top of his £2.3m in annual fixed pay.
In response to the news Howard Beckett, Unite Assistant General Secretary for Politics & Legal, Tweeted: “Disgusting that a UK bank has just told Sky News it plans to hand out £200 million in bankers’ bonuses this week. With unemployment up 800,000 & 120,000 UK CV19 fatalities, this is no time for bonuses. A wealth tax is needed.”
UK businesses borrowed £35.5 billion in net terms last year, with a further £26 billion forecast by the end of 2021, according to new research.
But consumers stuck in a cycle of lockdowns and pandemic restrictions cut back on spending, with the amount of credit card debt falling at the fastest levels in 26 years, according to the Financial Services forecast report by the EY ITEM Club.
The scale of borrowing by UK firms soared compared with previous years, with 2020 levels £25 billion higher than average borrowing over the previous five years, the report added.
Researchers found that small and medium-sized enterprises (SMEs) needed the lending options more than larger rivals, as companies scrambled to survive during the pandemic.
Since the latest national lockdowns in 2021, experts also predict many businesses are unlikely to start repaying their debts until 2024.
By comparison, consumers reduced credit card debts, preferring to make repayments. Net lending via credit cards fell 9.9% in 2020 – the largest fall since records began in 1994.
This is expected to return this year as hoped-for lockdown restrictions are eased, but is only predicted to rise by 2.1%.
Mortgage lending remains subdued and is expected to grow 2.3% this year – below the 3% growth in 2020.
The predictions are based on an assumption that the current lockdown lasts until the end of March and then restrictions are steadily relaxed as the vaccination programme is rolled out.
Anna Anthony, UK financial services managing partner at EY, said: “Financial services firms entered the pandemic in a position of capital strength and have continued to support the economy and business through one of the most testing periods we have ever faced.
“That being said, there are a significant number of current challenges, and more that lie ahead.
“By the end of this year, businesses will have borrowed in the region of £60 billion net since the start of the pandemic, which is a colossal amount, especially as for many it is just about survival, not expansion or growth.
“And the prospect of some, if not many firms, not being able make the required repayments is concerning for all involved.
“As well as rising loan losses, banks are contending with another year of squeezed interest margins and subdued consumer lending.
“Insurers too are facing a tricky year, with ongoing Covid-19 related pay-outs, persistent low interest rates and the impact of the FCA pricing review.
“However, it’s not bleak across the entire sector, and the outlook is a little more positive for UK asset managers in 2021 and beyond, with assets under management (AUM) set to rise in 2021 and 2022 as global markets recover.”
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