F and C reveals fears over Goodwin

Published on Tuesday 24 February 2009 20:17

ONE of Britain's major institutional investors spent much of last year privately questioning whether directors of RBS were properly holding former chief executive Sir Fred Goodwin to account, it was revealed yesterday.

As far back as 2007, F&C Asset Management held meetings with the bank questioning its decision-making process and the effectiveness of its non-executive directors.

The news of F&C's concerns comes a month after insurer Legal & General revealed that such were its fears over RBS that on several occasions last year it had told RBS to remove Goodwin.

RBS's former chairman, Sir Tom McKillop, and its non-executive directors have been criticised for failing to rein in the bank's aggressive international expansion under Goodwin.

Yesterday, Kirsty Jenkinson, an associate director at F&C responsible for monitoring banks' corporate governance, said

: "A lot of the concerns we had … were mainly linked to the role of the board, the role of management, and the oversight of where decisions were being made, and where strategy was being set."

When the bank proposed the takeover of part of ABN Amro, F&C, which manages almost 100 billion in assets, held meetings to look at "who was really calling the shots and making the decisions", she said.

By early 2008 F&C was questioning the ability of board members.

F&C became "frustrated" at the time it took for changes to be made, Jenkinson said, with the fund manager wanting new appointees "who may have been able to better advise on the strategy of the bank going forward".

Pressure was stepped up when RBS announced its 12bn rights issue at the end of April.

"Nobody wants to be a shareholder in a bank that's asking for a lot of money for a strategy that's not really working particularly well," Jenkinson said. "That's when you say 'where was the oversight? Where was the structure? Where should we be going as an international organisation?'"