Posts Tagged ‘Royal Bank of Scotland’
Fred, title inflation and bad business baronets
The Los Angeles Times story about the humiliation of Fred Goodwin describes Britain as “a land where essentially feudal titles still carry great prestige”. True-ish. But I have to say that the UK doesn’t do business honours like it used to. I’ve …
Former RBS chief executive loses knighthood
Fred Goodwin, the former chief executive of the Royal Bank of Scotland (RBS), has been stripped of his knighthood for his role in the bank’s collapse during the 2008 credit crunch.
The Queen formally approved the annulment of the honour yesterday, after it was decided Mr Goodwin’s award brought the honours system into disrepute.
The decision is unprecedented as honours have formerly only been withdrawn from people convicted of a crime.
Mr Goodwin was knighted in 2004 for services to banking but his actions during the banking crisis are believed to have contributed to the collapse of RBS.
The bank received £45bn of rescue-funding and is now more than 80% owned by the Government.
The Financial Services Authority and Treasury Select Committee believe the banks’ failure was a key factor in financial crisis and the subsequent recession in the UK.
Mr Goodwin oversaw the takeover of Dutch bank ABN Amro in a £49bn deal which took place at the onset of the credit crunch, exposing RBS’s weak balance sheet and precipitating its collapse.
When Mr Goodwin left the bank in November 2008 his £703,000-a-year pension deal, which included a £2.7m lump sum, led to public outrage.
In the event of a future banking crisis, Britain’s finance ministry will be able to take charge after new law reforming the regulation of the country’s financial system takes effect next year.
The legislation will disband the Financial Services Authority from 2013 and give the central bank the power to supervise banks and insurers.
In a speech following the publication of the draft law, Chancellor of the Exchequer George Osborne said: “When taxpayers’ money is at risk in a crisis this legislation gives the Chancellor (of the Exchequer) the power to direct the Bank of England to act.”
Misguided pitchforks for ‘Mr Fred’
By James Mackintosh, investment editor Arise, Mr Fred Goodwin. The banker who single-handedly brought down the British banking system has had his knighthood stripped away, and no one is sorry. Politicians, the public and the press are united in supporting …
Downing Street won’t micro-manage bonuses
Speaking to the BBC after the Royal Bank of Scotland’s chief executive announced his decision to forgo his bonus this year, the government has said that it will not block bonuses to the bank’s other executives.
RBS chief executive Stephen Hester was awarded £963,000 in shares but following pressure from public opinion and MPs he decided to follow the example of Lloyds Banking Group’s chief executive and waive his award.
Lloyds chief António Horta-Osório gave up a bonus which could have been worth £2.4m.
“We are not going to micro-manage bonuses,” a Downing Street spokeswoman said.
Bankers’ bonuses have been coming under increasing scrutiny since the 2007 banking crisis and with most banks expected to record a drop in revenues this year, the bonuses have been perceived as a reward for failure.
Banks’ investment banking operations suffered poor trading last year and multi- billion pound payouts for mis-sold payment protection insurance (PPI) have resulted in lower income which will reduce underlying profits.
Although Downing Street now plans to leave the question of bonuses to RBS’s management, Labour says it will continue to closely monitor the bonuses awarded to senior staff at RBS which is 66 per cent owned by the government.
At a European Parliament hearing in Brussels today, the European Union said it may impose tighter regulations on banks’ bonus payments to staff if they go against “all reason, common sense and morality.”
Michel Barnier, the European Union’s financial-services commissioner, may tighten up laws which govern banks across the EU if excessive bonuses continue to be paid.
One idea under consideration if for the role a bank’s shareholders play in setting pay awards to be strengthened.
Mr Barnier said the European Commission, the executive body of the European Union, will be “extremely vigilant” in monitoring bonuses paid by banks in 2012.
Three reasons why Stephen Hester is exceptional
Politicians would like to think that Stephen Hester’s decision to give up his bonus marks the start of a mass renunciation of “excessive pay” by private sector bosses. It is certainly time the UK corporate and political world moved on …