26/02/2009

Ex-RBS Boss Urged To Give Up Pension, As 'Largest Annual Losses' Announced

The failed boss of the Royal Bank of Scotland (RBS) has been called upon to give up his £650,000-a year pension, as the institution posts its largest annual loss in UK corporate history.

Prime Minister Gordon Brown has threatened legal action if disgraced former RBS chief Sir Fred Goodwin fails to comply with the request, it has emerged.

Speaking at an event in Suffolk, Mr Brown said: "I am determined that we pursue, if necessary by legal action, cases where too much money has been taken out in cases where there is less justification that has been claimed for remuneration."

He added: "Failure should not be rewarded. Practices are coming to light which have got to be dealt with. I became aware of this deal only a few days ago and I immediately demanded action on it.

"There has been no financial gain. It's been made absolutely clear that I was not properly informed. Where there is an inadvertent breach, you'll apologise for it and that is what I've done."

RBS chairman Sir Philip Hampton said Sir Fred will "think about" giving up some of his pension, which he valued at £693,000 a year.

Sir Philip said: "I have asked Fred if, given the events of recent times, would he make a voluntary reduction in his pension. He said he would think about it but I haven't heard back yet."

Today RBS announced a record pre-tax loss of £24.1 billion for 2008.
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The bank added that it would be placing £325 billion in toxic asserts into a taxpayer-backed protection scheme - in return for taking part in the plan, RBS agreed to lend £25 billion over the next 12 months.

The Treasury has been angered by the disclosure that Sir Fred - known as 'Fred the Shred' - is already benefiting from his £16 million pension he received, even though he is only 50.

"You cannot justify these excesses, especially when you have got such a failure of this magnitude," the Chancellor Alistair Darling said.

"At my request, my ministerial colleague Lord Myners spoke to Sir Fred and put it to him quite simply - 'look, in the circumstances in which this bank is now in, do you not think it right you should forego this?'.

"We have not had a reply. I am very clear that we will do whatever we can. That's why we have lawyers looking at this."

RBS chief executive Stephen Hester has also announced around 20,000 jobs would be axed at the bank as part of a five-year 'survival' plan.

Mr Hester admitted that, under the terms of the bailout, the Government's effective stake in the bank could rise to 95 per cent, but Derek Simpson, joint leader of the Unite union, called for an immediate full nationalisation.

"We are extremely frustrated by the lack of clarity over the company's restructuring proposals with no firm detail on jobs," Mr Simpson said.

"The uncertainty hanging over the heads of these workers is unacceptable."

See: Government To Buy RBS

(JM/BMcC)

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