Greed is Good(win) redux

Directors of the Royal Bank of Scotland are to be rebuked by shareholders over their pay and pensions at the bank’s annual general meeting in Edinburgh.

A government agency, as majority shareholder, will register the public’s anger at the pension awarded to former chief executive Sir Fred Goodwin. Sir Fred resigned in October after the bank needed a government rescue but was still given a £703,000-a-year pension.

However the bank does not have to accept shareholders’ demands.

In February RBS reported it made a loss of £24.1bn in 2008 – the largest annual loss in UK corporate history. Following a huge input of taxpayer’s money to rescue the bank, the government now owns a 68% stake in the lender.

RBS has become the focus for public anger at the scale and expense of the finance sector’s excess after Sir Fred presided over the bank’s collapse and his settlement came to light. It is against this backdrop that the new team at the top will face shareholders later.

- BBC News

Money for nothing, and this dick’s scot free…

Harriet Harman has said former Royal Bank of Scotland (RBS) chief Sir Fred Goodwin should not “count on” keeping his full £650,000 a year pension.

The deputy Labour leader described the pension settlement – agreed by the RBS board – as “money for nothing”.

The sum was unacceptable in “the court of public opinion,” she told the BBC, and the government “would step in”…

Ms Harman said Sir Fred, 50, should agree to waive some of the cash, saying this was the most “honourable” thing to do.
“Sir Fred Goodwin should not count on being £650,000 a year better off because it is not going to happen,” she told BBC One’s Andrew Marr show.

Ministers have said they would be prepared to take legal action and other unspecified measures to recover some of the money, saying the pay-out is inconsistent with the disastrous state that Sir Fred left the bank in.

Before accepting the Andrew Marr interview and citing the “court of public opinion”, perhaps Harriet Harman should be reminded that the reason Fred Goodwin is able to take the money and run with no observable legal recourse (nobody is eager to empower the government to arbitrarily seize their pension) is Ministerial incompetence. Public wrath isn’t reserved exclusively for the banker and wont be ameliorate by a long court case should Goodwin exercise his right to defend a legal challenge.

The only real question is whether public appetite is genuinely hostile enough to free the government to bankrupt RBS and nationalise the bank entirely. This seems the only option to stop the pension arrangement.

Greed is Good(win)

Ex-banker Sir Fred Goodwin’s refusal to hand back his £16m pension has been condemned by the Treasury as “unfortunate and unacceptable”.

Sir Fred says ministers knew about the £693,000 a year deal for months and that it was approved by Lord Myners.

Lord Myners denies this and has said such a “huge reward” cannot be justified given the bank’s losses. RBS announced a record corporate loss of £24.1bn on Thursday and received a second taxpayer bail-out of £13bn.

Former chief executive Sir Fred’s pension pot doubled to £16m last October when the 50-year-old agreed to take early retirement…

Chancellor Alistair Darling said he discovered a week ago that the package was “discretionary” and could have been blocked. He said the government was now investigating ways of “clawing back” some of the money, amid mounting cross-party anger about rewards for failure.

But its appeal to Sir Fred to hand it back voluntarily was angrily rejected by the former banker, who claimed it had been approved by Treasury Minister Lord Myners.

Sir Fred said he had already given up a significant part of his salary as a “gesture” when he was negotiating his departure from the bank.

Robert Peston examines the culpability of RBS board members and publishes the correspondence between Goodwin and Myners on the BBC News website. Not surprisingly, Fred “the shred” isn’t very fond of Mr Peston at the moment.