EDINBURGH (Reuters) - The British government has asked former Royal Bank of Scotland chief executive Fred Goodwin to give up an annual pension worth 693,000 pounds that he can draw from the state-controlled bank.
RBS reported a loss of 24.1 billion pounds for 2008 on Thursday, the biggest in British corporate history. The government owns 70 percent in RBS after bailing out the acquisitive bank.
“You cannot justify these excesses, especially when you’ve got such a failure of this magnitude,” Chancellor Alistair Darling told BBC Radio 4.
Darling said his ministerial colleague Paul Myners had spoken to Goodwin and asked him to forego his pension. Goodwin has yet to respond, Darling said.
The bank’s new chairman Philip Hampton said on Thursday it was looking at any way of reducing the payment.
Hampton had asked Goodwin in January if he would forfeit some of the pension. “He told me he’d think about it. As of today, I think he’s still thinking,” he told reporters.
Prime Minister Gordon Brown said bankers should not be rewarded for failure.
“I can assure you that we are doing everything that we can not only to clean up the banks so that they are capable of lending again but to make sure that the old bonus culture, the old remuneration culture and the old excesses are swept away,” he told Sky News.
The revelation that Goodwin, a Scot nicknamed “Fred the Shred” for his cost-cutting prowess, will get an annual sum that it would take the average Briton more than 20 years to earn has fuelled public anger over rewards for bankers.
That anger was evident on the streets of Edinburgh, where RBS is headquartered.
“Does this man have a conscience?” asked Derek Mortimer, a 43-year-old self-employed mortgage arrears councillor.
A 55-year-old hotel worker, who only gave his first name as Robert, said: “This man brought this city to its knees and he had to be forced to apologise.”
Goodwin quit as the head of RBS last October when the bank was forced to take 20 billion pounds in emergency state funding.
Hampton said the total value of Goodwin’s pension pot was 16.6 million pounds, almost double the figure shown for the end of 2007 in the bank’s last annual report. The payout was reworked when Goodwin stepped down.
He was regarded as one of the world’s top bankers after a string of acquisitions made his Edinburgh-based bank one of the world’s biggest across Europe, the United States and Asia.
But his takeover of Dutch bank ABN AMRO in October 2007 proved a deal too far -- ramping up investment banking exposure and eroding capital just as the worst financial crisis in living memory took hold.
Additional reporting by Steve Slater and Matt Falloon; writing by Keith Weir; Editing by Dan Lalor
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