Spineless lackeys must join list of shamed bankers

In Sir Fred Goodwin's case, it was his decision as chief executive of Royal Bank of Scotland to buy ABN-Amro that proved his and his bank's undoing. In Blank's, he took a perfectly good, conservatively-run operation, Lloyds, and merged it with a giant, aggressive organisation, HBOS. The result is a huge mess of an organisation called Lloyds Banking Group - and what may prove to be a massive loss for his previously contented investors.

His claim on Jeff Randall Live on Sky News last night that the merger was good for Lloyds shareholders was greeted with a fall of nearly 50 per cent in the shares. They've recovered partly but the damage is done. Lloyds investors do not believe him.

What they suspect happened is that Blank did his friend Gordon Brown a favour by taking HBOS -reeling from excessive corporate lending in the Bank of Scotland division - out of the nationalisation equation. The banks were in crisis, HBOS was the biggest of those, and up stepped Blank to do the Prime Minister's bidding. In return, competition rules were shoved aside to allow the creation of a high street superbank.

Blank says that's not the case, that he and Lloyds chief executive, Eric Daniels, had been plotting the move, that they were fully aware of what they were buying. Yes, they got a break from the Government in being allowed to buy HBOS but that was the extent of the bargain. He said as much again yesterday on Randall's programme and today's calamitous plunge is the response.

The City suspects that the new group is short of capital and the Government may have to raise its stake from 43 per cent to 50 per cent. For Lloyds shareholders, the switch in fortunes is incredible. Everyone supposed HBOS was trouble, that the BOS end was piled high with toxic debt. Lloyds, by contrast was well-managed and in little danger from the subprime and credit crunch fallout. But Blank and Daniels knew better.

We've been here before. At RBS, Goodwin drove RBS to undreamed of heights as one of the biggest banks in the world. When Barclays first bid for ABN-Amro, the reaction of the British bank's peers was to shrug. ABN-Amro was a tough ask, a jumble of different banks around the world, good luck to them. Not Fred. He saw the Barclays move as a threat to RBS's hard-fought for position as Britain's next banking powerhouse after HSBC - and he decided to attack.

But the Barclays offer was in shares; Goodwin, having launched repeated takeovers to push RBS forward, could not do the same. He paid cash. He also joined up with Santander and Fortis. Under the deal they struck, though, Santander, the Spanish bank run by people with a desire as great as Goodwin's, got the best bit - ABN-Amro's operations in Latin America. The RBS chief had every chance to pull back and every excuse because the markets were turning. But he pressed ahead. The outcome was a bank loaded with debt and in no shape to fight the credit crunch. Crucially, when RBS cracked, few leaped to Goodwin's defence. He was so unpopular in the Square Mile that the queues to dance on his crushed CV were long. But to say that he should be stripped of his knighthood is absurd. He has not committed any offence that we know of. He might cause wide offence, but that is different. Vince Cable rightly says Goodwin should never have received the honour, but that too is not the same as taking it off him now. RBS was chaired by Sir Tom McKillop, who had previously worked in pharmaceuticals. If Goodwin's award is on the line then McKillop's should be too. Also in any roll-call of shame should be Merrill Lynch, the investment bank that worked on the ABN-Amro takeover and earned huge bonuses.

Goodwin himself can enjoy a comfy retirement. He received £4.2 million alone in 2007, his last full year, and his pension pot stands at £8.37 million. Just as guilty are the spineless members of the RBS board who went along with him. Goodwin has been joined by Blank. It looks as though nothing but full nationalisation for both banks is the answer - along with a clearout of all the venal lackeys who supposedly constituted a generation of world-beating British bankers.