Shares in Royal Bank of Scotland rallied on Thursday after the state-rescued lender said it had narrowed its losses last year, amid the unveiling of contentious plans for major bonuses to its employees.
RBS suffered a net loss of £3.6 billion pounds (A$6.18bn) in 2009 - a major improvement on a record shortfall of £24.3bn suffered the previous year.
The bank's chief executive Stephen Hester has been praised in some quarters for saying he would be turning down his own financial reward amid public anger over bankers' pay, joining counterparts at British banks Barclays and Lloyds.
Yet the bank has still been heavily criticised following news from yesterday's press conference that 'over 100' members of the bank, which receives billions in British taxpayers' money, received a bonus of over £1m.
'Why do you want to know' was reportedly the inital response to the question from the press.
Share price surge
RBS's share price surged 6.23 per cent to 38.38 pence, topping London's main FTSE 100 index, as dealers greeted the smaller-than-expected loss.
Market expectations had been for a loss after tax of £5.2bn, according to analysts polled by Dow Jones Newswires.
Hester "decided to waive this bonus award, given public controversy on banking pay and the potential for his bonus to divert attention from and weaken support for the RBS turnaround and recovery," the group said in a statement.
But the chief executive defended the bank's decision to allocate the 2009 bonus pool for other staff, arguing that it was necessary to prevent more workers leaving the beleaguered group.
UK Financial Investments, which oversees the British government's bank holdings, said it had approved the bonus pool, said to total £1.6bn according to British news agency the Press Association.
RBS: On defensive over bonuses
Hester told BBC radio that the pool was set by the board and was not "imposed upon us from outside" - but he conceded that "internal and external pressures" had been taken into account.
RBS said it was determined that there would be "no reward for failure" and pointed out that "senior executives responsible for the overall losses" had departed the company.
There is mounting public anger about banking sector bonuses, which some experts blame for encouraging the kind of excessive risk-taking that helped spark the global financial crisis and subsequent worldwide recession.
The bank said it was boosted by a strong performance from its investment banking division, but was hampered by soaring bad debts or loans which have been written off.
2010 to be 'hard slog'
The embattled group forecast that impairment losses had likely peaked, adding that it made "good progress" on restructuring, but admitted that the outlook for 2010 was challenging.
"While the riskiest part of the recovery plan is behind us, 2010 will be a year of hard slog," RBS said in the results statement.
Global Banking and Markets, the investment banking division of RBS, saw operating profits hit £6.49bn in 2009, after a loss of £1.27bn in 2008.
"We are one year into our five-year turnaround plan and have taken significant steps along the path to recovery," Hester said in the statement.
"The strengths of our core business are becoming clearer, while the legacy of losses and exposures from the crisis is running off."
RBS said impairment losses rose sharply to £13.9bn last year, up from £7.4 bbns in 2008.
But it added: "Signs that impairments might have peaked appear to have been borne out in the fourth quarter, and there are indications that the pace of downwards credit rating migration for corporates is slowing."
RBS also warned that the outlook depended "on the shape and pace of economic recovery and the way it feeds through to business activity, interest rates and credit impairments".
The bank is now majority owned by the British state, which pumped billions of pounds into the crisis-hit group in the world's biggest banking bailout.
The troubled group was ravaged by the fierce global credit crunch and its takeover of Dutch bank giant ABN Amro at the top of the market in 2007 - just before the financial crisis struck.
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