So much has already been published on the Internet plus TV and radio, can there be much left to say on the subject of ex Chief Executive of Royal Bank of Scotland Sir Fred Goodwin’s pension?
Sir Fred agreed to step down as boss having been held in part responsible for losses at RBS 24.1 billion pounds for 2008, a record in British corporate history. Its losses came due to the credit crunch and its costly acquisition of Dutch lender ABN Amro.
Sir Fred is 50yrs old and his pension said to be worth 650K p annum is due to be paid him for life. The renewed focus on the pension came as the Treasury faced demands to explain an alleged secret dossier at the heart of the Lloyds takeover of Halifax Bank of Scotland.
The bank has already taken 20 billion pounds of government funds and says it will raise another 13 billion pounds of state money in return for more shares. This could see the state’s interest rise as high as 95 percent, almost full nationalisation.
Now Prime Minister Gordon Brown has threatened possible legal action over the affair.
Sir Fred Goodwin wrote to Treasury Minister Lord Paul Myners saying he had already accepted less money than he was due when he quit last year.
I accept responsibility for that which I was responsible for and recognise that my actions must be consistent with this, he wrote.
I believe that they have been and to voluntarily accept a reduction in a pension entitlement which has been built up over many years... is not warranted.
RBS will now pay 6.5 billion pounds to take part in the Asset Protection Scheme, aimed at stimulating bank lending in recession-hit Britain.
In return for its participation, RBS will commit to lend 25 billion pounds to consumers and businesses this year and a similar amount in 2010.
Stephen Hester, Goodwin’s successor, also announced plans to cut 2.5 billion pounds in costs across RBS by 2011, saying this would regrettably led to more job losses. Reports have suggested that up to 20,000 jobs could go.
The move will see RBS sell off and withdraw or reduce operations in 36 countries to refocus activities on the domestic market, as well as pulling out of sponsoring the Williams Formula One team next year.
The situation at RBS was certainly a disaster and if it were not for the government stepping in it surely wouldn’t have survived, resulting in nobody receiving either a pension or any future employment. However the bank has now been bailed out and Sir Fred agreed to go as boss. The question is should be entitled to such a generous pension in the circumstances? The row is now very public and political, including threats that Sir Fred may be asked to return his knighthood.
As always we will be pleased to hear your thoughts on Money Talks.
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