Give up your £650,000 pension, Darling tells ex-RBS chief Goodwin

Published on Thursday 26 February 2009 10:03

CHANCELLOR Alistair Darling urged failed banking boss Sir Fred Goodwin to give up his £650,000 pension today – threatening legal action if he fails to act voluntarily to end the controversy.

The Treasury was angered by the revelation that the former chief of Royal Bank of Scotland, which today announced a UK record 24.1 billion annual loss, is already benefiting from his 16 million pension pot, even though he is only 50.

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

He told BBC Radio 4's Today programme that he sent a fellow minister to ask Sir Fred to act.

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

"We have not had a reply.

"So I am very clear that we will do whatever we can. That's why we have the lawyers looking at this. But I do think that, on a voluntary basis, Sir Fred could resolve this problem and he could do it quite quickly."

Former chief executive Sir Fred – known as "Fred the Shred" for his ruthless cost-cutting – is widely seen as the architect of the bank's disastrous strategy of corporate acquisitions which led to RBS's downfall.

He paid the price last year, losing his job – along with chairman Sir Tom McKillop – when the bank had to be bailed out by the taxpayer.

"When I found out, I was very clear that we had to go back to RBS to ask: who negotiated this; why did they negotiate it; and importantly whether or not they can have grounds for trying to claw some of it back," Mr Darling said.

"The 8 million figure that was around and had been in the public domain for some time, the bank's view of that was that they were bound by that commercially.

"This figure is of an order of magnitude different and I think people will find it very difficult to understand how you can get paid 650,000 a year for the rest of your life when – just look at the state RBS is in at the moment."

RBS – the bulk of which is now owned by the taxpayer after a 20 billion bailout and a move today to place 325 billion in toxic assets into the state – backed Asset Protection Scheme to help take risks off its balance sheet – is also to make big cuts to the business involving significant job losses.