A ROYAL BANK OF SCOTLAND executive who led its investments into “toxic” sub-prime loans was paid close to £40m in just three years, The Sunday Times can reveal.
Jay Levine, 47, was the bank’s highest-paid employee, earning almost four times more than former chief executive Sir Fred Goodwin.
Levine, who ran the group’s American investment bank RBS Greenwich Capital, received the bumper pay deals over 2005, 2006 and 2007, according to sources close to the bank.
His pay has never been disclosed since he was not a main-board director. The pay deals came as the bank ramped up its exposures to sub-prime mortgages, asset-backed securities and collateralised debt obligations (CDOs).
Levine, who lives in well-heeled Riverside, Connecticut, became co-head of Greenwich in 2000 after RBS acquired the business as part of its takeover of NatWest. In 2004 he was promoted to a larger role that also saw him head up corporate banking for the group across North America.
RBS has unveiled about £12 billion of write-downs since the credit crunch began and is poised to unveil full-year losses of up to £28 billion – the biggest loss in UK corporate history.
There are now six class-action lawsuits that have been filed against the group in the Southern District Court of New York, alleging that RBS misled investors on the true state of its accounts in a series of filings with the US Securities and Exchange Commission (SEC).
One of the lawsuits details how the bank’s exposures to CDOs ballooned from 2005 onwards. The filing, lodged under the name Gary Kosseff, quotes an SEC document in which RBS said that 76% of its £5.9 billion CDO portfolio had been acquired since 2006.
Other suits allege that RBS was “negligent” in due diligence on its acquisition of ABN Amro, or that it misled investors at the time of its £12 billion rights issue last April.
RBS said it was aware of the actions and that they would be “defended vigorously”.
Levine announced he was retiring from RBS in December 2007, but has since been appointed chief executive of Capmark Financial, a lender specialising in commercial real estate. At Capmark he replaced William F Aldinger III, the banker who sold sub-prime mortgage business Household Financial to HSBC in 2003.
Levine has donated thousands of dollars to the US Democrats over the past three years. Some of his biggest donations have gone to Chris Dodd, the head of the US Senate’s banking committee. He also supported former New York mayor Rudy Giuliani, a Republican, in his presidential campaign.
And Levine was on the board of a financial lobby group that sued the state of Connecticut over new laws that would force political donors to disclose donations made through spouses or children.
February 8, 2009
Iain Dey and Dominic Rushe, New York
Source: The Sunday Times