Stephen Hester has offered to waive his bonus for this year
The Royal Bank of Scotland could have made 1bn more last year if its best staff had not been poached by other banks, the bank"s boss claimed today.
RBS posted a 3.6 billion loss today - but said it will still pay about 1.6 billion in bonuses to its staff.
But chief executive Stephen Hester has said he believes the top-performing staff who left the company in last year"s exodus could have added 1 billion to profits.
Mr Hester told BBC Radio 4"s Today programme: "We"ve had a small experiment in this respect... some of our best-performing people have been leaving in their thousands.
"The people who left us last year, I believe, would have increased our profits by up to 1bn beyond the ones that we"ve got."
The RBS boss, who waived his own bonus for 2009, said he had done so to try to take the heat out of the bonus issue.
Mr Hester said the intense levels of scrutiny over the issue of remuneration were "crosses we have to bear".
The 2009 shortfall in profits at the part-nationalised lender was better than expected and shares surged around 7 per cent this morning as a result.
The figure compares with a record 24.3 billion deficit the year before - the largest in UK corporate history - as the bank was sucked into the maelstrom of the financial crisis.
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RBS, which is now 84 per cent taxpayer-owned after a series of bail-outs, has attracted huge controversy about the level of planned bonuses at its investment arm.
Chief executive Stephen Hester said the level of the bank"s rewards pot was set by the board and was not "imposed upon us from outside", although he added that there had been a need to balance external pressures with the need to retain key workers.
"I do believe because of the nature of the tightrope that we are walking we will continue to lose staff," he said.
Workers at RBS will share bonus pool of 1.3bn
RBS said it expects to make a 208 million contribution to the Treasury bonus tax.
The decision means that 18,000 investment bankers at RBS - which is 84 per cent taxpayer-owned after a string of bailouts - will be paid a massive 73,000 each - three times the national average salary.
The decision to allow the bonus payments to go through will prompt outrage from the public.
Chief executive Stephen Hester said the results had "exceeded all the principal milestones" set for the first year of its turnaround plan.
The announcement came after Gordon Brown yesterday declared that the bailed-out banks would be forced to "pay back every penny that is owed to the British public."
The payout to investment bankers was given the green light by UK Financial Investments (UKFI), the body set up to manage the Government"s stakes in banks.
Mr Hester, who has waived his own payout for last year, had previously said the bank would pay "the minimum we can get away with".
Shadow chancellor George Osborne said "people will find it very difficult to understand" how RBS could pay out bonuses in the current circumstances.
"We have just got to look at the whole banking sector and try to bring this pay down. It has got to ridiculous levels," he told BBC Breakfast.
Mr Osborne did not deny that a Conservative government would also have given the green light to the RBS bonuses but added: "I welcome there are no cash bonuses."
He said RBS should not be singled out and he recognised the bank"s argument that important staff would leave if pay was not competitive.
Mr Osborne said "unacceptable" pay levels throughout the sector must be tackled.
Mr Hester added today that the group"s core business - theactivities that will stay part of the organisation after therestructuring plans - saw profits rise from 4.4 billion in 2008 to8.3 billion last year.
Bad debt and other impairment charges across the group increased to 13.9 billion from 7.7 billion the previous year.
Thebank said there were signs that its level of soured loans could havereached its peak, with the fourth quarter looking less dire forcorporate clients.
However it warned the financial circumstancesof many consumers and businesses remain fragile and that currenteconomic uncertainty "could expose some customers to furtherdifficulty".
The bank said it is in discussion with the Government about alteringits lending commitments to "reflect the economic circumstances" overthe next year.
It stressed it was "unambiguously open for business" in its lendingto customers, but the strained economic environment had caused manycustomers to become "nervous about financial matters" and reduce theirborrowings.
As part of its bailout terms, the firm agreed to make an extra 25billion available to customers in loans - 9 billion for mortgages and16 billion for business lending.
The firm said its was on course to surpass its commitment to lend tohouseholders, with net mortgage lending over the year at 11.8 billion.
Lending to firms was 60.2 billion in 2009, but after loanrepayments and overdraft movements saw business lending balances down 8per cent by the year end.
Mr Hester said 2009 was "a year of substantial progress" for the bank.
"RBS is being restructured and run to serve customers well, to besafe and stable and to restore sustainable shareholder value for all,"he said.
"That is our legal duty and it is our intention and desire. It isalso the only way taxpayers will recover the support they have givenus."
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