Ex-RBS chief clings to hefty pension in crisis

Ex-RBS chief clings to hefty pension in crisis
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First Published: Fri, Feb 27 2009. 11 24 AM IST
Updated: Fri, Feb 27 2009. 11 24 AM IST
London: The British government said on Thursday it was “misinformed” about former Royal Bank of Scotland chief executive Fred Goodwin’s £693,000 ($987,200) a year pension, which he is clinging on to in defiance of criticism by government ministers.
Goodwin, who left RBS in October when the government bailed out the acquisitive bank, has refused to give up any of the pension pot, valued at £16.6 million according to RBS chairman Philip Hampton, despite government claims that there should be no rewards for failure in the banking system.
Prime Minister Gordon Brown told Sky News on Thursday: “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.”
RBS reported a loss of £24.1 billion, the biggest in British corporate history, on Thursday, and said it would receive another £13 billion of government money to help insure £325 billion of its most toxic assets.
Goodwin said in a letter to Finance Minister Paul Myners, which was released to news media, that the government had approved his pension and he did not believe a reduction in the sum was “warranted.”
“My pension was raised with you by the chairman of the committee and you indicated that you were aware of my entitlement and that no further ‘gestures´ would be required,” he said.
Myners responded by saying that Goodwin’s stance was “unfortunate and unacceptable,” and while he acknowledged he knew the size of the pension pot in October, he was “unaware of any scope for discretion.”
“I hope that on reflection you will now share my clear view that the losses reported today by the bank which you ran until October cannot justify such a huge award,” he said in a letter on Thursday, which was also released.
Speaking on the BBC’s Newsnight programme, Myners’ ministerial colleague Stephen Timms said Myners was informed that Goodwin had a contractual entitlement to the payout, when in fact part of the pension pot was discretionary.
“We were clearly given an impression that was mistaken,” he said.
RBS had said on Wednesday Goodwin’s pension pot was worth £16 million and he was drawing a pension of £650,000 a year, but the bank’s chairman said on Thursday the total was £16.6 million.
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First Published: Fri, Feb 27 2009. 11 24 AM IST
More Topics: Goodwin | Pension | RBS | Government | Bailout |