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Top two at RBS are facing new calls to head for the exit
Nick Goodway, Evening Standard8 Oct 2008
Sir Fred Goodwin, chief executive of Royal Bank of Scotland, and his chairman Sir Tom McKillop were once again under pressure to quit after today's £500 billion banks bailout.
But RBS denied categorically the two men were going, and dismissed reports that Goodwin will be replaced by Stephen Hester, the former investment banker who was on the boards of Abbey and Northern Rock and is now chief executive of British Land.
It similarly denied that McKillop will hand over to Sir Philip Hampton, chairman of Sainsbury's and former finance director of Lloyds TSB, BT and British Gas.
Goodwin was last year paid just over £4 million, including £2.86 million in bonuses. A pay-off would be hefty. He and McKillop came under huge pressure earlier this year after the bank had to raise £12 billion from shareholders through a rights issue at 200p a share.
RBS shares yesterday plunged 39% to 90p — 55% below the rights-issue price. They hit 597p at their peak.
Goodwin was seen to have massively overpaid when he led the consortium that bid ¤70 billion (£54 billion) for Dutch bank ABN Amro only months before the credit crunch blew up last year.
He survived this spring's annual meeting, though many leading investors thought then his days were numbered. Treasury sources today denied he had been forced to offer his resignation as part of the banks rescue package.
An RBS spokeswoman said: “The board has been completely focused on fixing things, and these issues have not even been discussed.”
Goodwin earned his nickname Fred the Shred for the ruthless way he cut costs and axed 18,000 jobs after RBS took over larger rival NatWest eight years ago. It also owns insurer Direct Line and private banks Coutts, Drummonds, Child and Adam.
Credit rating agency Standard & Poor's cut RBS's main debt rating by one point on Monday, helping to aggravate yesterday's share-price collapse. Goodwin told shareholders in December 2006: “We don't need to make any big acquisitions now, and the real message in the trading update is that we are generating results ahead of expectations on a purely organic basis, and that feels like a pretty good place to be.”
He launched the ABN bid four months later, just before it became apparent a credit crunch was on the way.
Sir Fred's decision to keep going may have led to the collapse of his reputation as a stellar banker. That reputation was formed when he trumped arch-rival Bank of Scotland to acquire NatWest in 2000. The deal was then the most remarkable the banking industry had seen, with a stalwart of the UK High Street falling into Scottish arms.
Scottish First Minister Alex Salmond today said the speculation surrounding the future of Sir Fred was “not helpful” while the stabilisation package was being announced.
“The fact that it [RBS] came under such pressure yesterday is an indication of the very peculiar, unusual circumstances of leaks and rumours that were circulating around yesterday,” he said. “I'm sure everybody who was in that process would have much preferred that hadn't happened when they look back.”
Reader views (4)
The arrogance of these overpaid clerks is absolutely mind boggling.
They represent a coterie of self serving and self appointed managers whose merits and abilities pale into insignificance when measured against the individual small entrepreneurs who risk their homes and family prosperity to employ others and fuel the economy.
What do these muppets know about risk? They talk blithely about "responsibility". It's doubtful if they'd even secure employment opening and closing doors.
From now on, they should be known as "Wank Managers" - what could be more fitting.
- Frank Neumann, Nantwich UK, 08/10/2008 21:48
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I find it ludicrous that its been suggested that an ex board member at Northern Rock and Abbey would replace the current CExec?
So one bank's loser is another one's replacement?
I think my miserly old dad could do a better job of it than any of current managers!
- Nicola, Netherlands, 08/10/2008 16:11
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Goodwin and his ego have destroyed shareholder value, put billions of pounds of customer deposits at risk and contributed significantly to the current financial crisis by aggressively expanding the activity of the bank's investment arm.
Now saddled with so called toxic assets from its own shenanigans, not to mention those acquired through the disastrous ABN deal, RBS should be thankful to the Government for helping it up off its knees. And investors should demand his immediate replacement.
The organisation is too thinly spread over too many geographies, which its parochial board is too inexperienced to charter. Although it's domestic retail business is currently run by a bloke who found fame by inventing a type of nappy, so its UK staff can breathe a sigh of relief.
- Stef Kristensen, Warrington, 08/10/2008 14:48
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Why should poor Fred the Shred lose his job? Do you really believe that he can live on unemployment benefits?
Have some mercy! The guy only shred 18000 jobs and added the saved salaries and bonuses to his own. I don't think this had any bad effect on the overall RBS salary bill, it was only a shift of expenses from 18000 staff to one.
If the Government denies his services, how could he afford to buy art pieces from Saatchi or from Damien Hirst? How could he afford to maintain his vintage car? After all, he has worked so hard to ruin RBS.
- George P, Athens, Greece, 08/10/2008 11:00
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