Fred Goodwin
Encyclopedia
Sir Frederick Anderson Goodwin CA
, FCIBS
(born 17 August 1958) is a Scottish
chartered accountant
and former banker who was chief executive of the Royal Bank of Scotland Group (RBS) between 2001 and 2009.
From 2000 until 2008 he presided over RBS's rapid rise to global prominence as the world's largest company (by assets - £1.9 trillion), and fifth-largest bank by stock market value and its even more rapid fall as RBS was forced into effective nationalisation in 2008.
On October 11, 2008, Goodwin officially announced his resignation as Chief Executive and an early retirement, effective from January 31, 2009 - a month before RBS announced that its 2008 loss totalled £24.1bn, the largest annual loss in UK corporate history. Following the February 2009 disclosure of his approximately £700,000 per year pension award from RBS he was the subject of widespread public, political and media criticism.
From January 2010 he was employed as a senior adviser to RMJM
, an international architecture firm. He left the position after less than a year.
, Renfrewshire
, Goodwin is the son of a Scottish electrician
and was the first of his family to go to university, attending Paisley Grammar School
before studying law at Glasgow University. He joined accountants Touche Ross
, and qualified as a chartered accountant
in 1983. Between 1985 and 1987 he was part of a Touche Ross management consultant team at Rosyth Dockyard
, and became a partner in Touche Ross in 1988. He was appointed a director of Short Brothers
, and tasked with preparing the largest industrial employer in Northern Ireland for its 1989 privatisation. For Touche Ross he headed the worldwide liquidation of Bank of Credit and Commerce International
after its collapse in July 1991. At 32, Goodwin was in charge of 1,000 people with teams from London
to Abu Dhabi
and the Cayman Islands
that eventually returned over half the money from one of the most complicated, high-profile financial frauds ever.
His move into banking came through his work at Touche Ross with the National Australia Bank
, contributing due diligence
to its 1987 takeover of Clydesdale Bank
from the then Midland Bank
and again with its 1995 takeover of Yorkshire Bank
. During work on the latter he caught the eye of National Australia Bank executive Don Argus, and was invited to become deputy chief executive of Clydesdale in 1995, and as per his "five-second rule", accepted on the spot rising to chief executive of National Australia's British banking operations in 1996. Around this time he gained the moniker "Fred the Shred" from City
financiers, reflecting a reputation for ruthlessly generating cost savings and efficiencies whilst at Clydesdale. He was later described as "a corporate Attila", having gained a reputation in the City for being a fearsome outsider - being Scottish, and not educated at a public school
or at Oxbridge
- who made raids in the south and abroad when it suited him.
He joined Royal Bank of Scotland in 1998 as deputy CEO to then-CEO Sir George Mathewson
, who had ambitions to make RBS a major player rather than a regional bank. RBS made waves in 2000 with its £23.6bn takeover of NatWest, a bank three times its size. Although Goodwin's predecessor Mathewson led the deal, it was Goodwin's diligence and ability to impress investors which secured it against fierce competition from the Bank of Scotland
. The Sunday Times wrote that "The NatWest deal was the making of Goodwin," with Goodwin promoted to CEO in January 2001, soon after it was secured, dedicated to continuing Mathewson's vision. Goodwin lived up to his reputation, cutting 18,000 jobs by merging parts of RBS and NatWest.
After the purchase of NatWest, RBS made a string of further acquisitions around the world, including the purchase of Irish mortgage provider First Active
and UK insurers Churchill Insurance and Direct Line
. During negotiations with Credit Suisse
over the acquisition of Churchill, it is said that Goodwin maintained silence for an hour at lunch with Credit Suisse's CEO, supporting his demand for indemnity against any potential losses from with the associated The Accident Group
, which would collapse soon after. He got his way. RBS also bulked up its US
Citizens Financial Group
, Inc arm with a string of further deals. Then in May 2004, RBS said it would purchase Charter One Financial Inc. of Cleveland, Ohio for $10.5 billion. The deal, at a price "widely considered too high" spread the RBS's banking web across the Midwest
for the first time, and made its U.S. banking operations No. 7 in the United States.
From the time that Goodwin took over as chief executive until 2007, RBS's assets quadrupled, its cost-to-income ratio improved markedly, and its profits soared. In 2006 pre-tax profits climbed 16% to £9.2 billion with significant growth coming from its investment banking
business. By 2008 RBS was the fifth-largest bank in the world by market capitalisation. One of the factors in its rise was its enthusiasm for supporting leveraged buyouts. In 2008 it lent $9.3bn, more than double its nearest rival.
However, following investor unrest in the build-up to RBS's acquisition of a $1.6bn minority stake in Bank of China
in 2005 Goodwin was criticised by some RBS shareholders for putting global expansion ahead of short-term financial returns. Between 2002 and 2005 the share price plateaued at around £17 per share, having nearly trebled between February 2000 and May 2002. Goodwin was accused of megalomania
by some shareholders, as reported by Dresdner Kleinwort
analyst James Eden (who said he thought the label was 'unwarranted'). After the Bank of China deal, he was forced to promise RBS shareholders he would not indulge in any further big acquisitions and focus instead on growing the group organically.
However, in early 2007 Dutch bank ABN Amro
was under pressure from hedge fund
s, including Chris Hohn of the hedge fund TCI
, to break itself up in order to maximise shareholder value. ABN chief executive Rijkman Groenink suspected RBS of acting in concert with the hedge fund Tosca, which was chaired by former RBS Chairman Mathewson and recommended the takeover bid of an RBS consortium, against the proposed merger with Barclays Bank. Goodwin arranged a consortium of RBS, Fortis
and former RBS shareholders Grupo Santander
, to purchase the assets of ABN Amro and break them up in a three-way split. According to the proposed deal, RBS would take over ABN's Chicago operations, LaSalle Bank
, and ABN's wholesale operations; while Santander would take the Brazilian operations and Fortis the Dutch operations. In a manoeuvre "labelled in all quarters as a poison pill
" ABN Amro agreed to sell key RBS target LaSalle to Bank of America
for $21bn, but in July 2007 the consortium offered the same $98bn for ABN's remaining assets, with a higher cash component (93%). The deal was struck in October 2007 as the global liquidity crisis began to develop, with Barclays withdrawing its EUR61bn bid and ABN's shareholders endorsing the EUR71bn RBS takeover. Coming after the nationalisation of Northern Rock
due to the freezing of the wholesale money markets, the deal proved the final straw for RBS, as it severely weakened its balance sheet not only through the size of the acquisition but due to ABN Amro's substantial exposure to the US subprime mortgage crisis
.
, eventually proved disastrous and led to the near-collapse of RBS in the October 2008 liquidity crisis. The EUR 71bn (£55bn) ABN AMRO deal (of which RBS's share was £10bn ) in particular stretched the bank's capital position - £16.8bn of RBS's record £24.1bn loss is attributed to writedowns relating to the takeover of ABN AMRO.
It was not, however, the sole source of RBS's problems, as RBS was exposed to the liquidity crisis in a number of ways, particularly through US subsidiaries including RBS Greenwich Capital
. Although the takeover of NatWest launched RBS's meteoric rise, it came with an investment bank subsidiary, Greenwich NatWest. RBS was unable to dispose of it as planned as a result of the involvement of the NatWest Three
in the collapse of Enron
. However the business (now RBS Greenwich Capital
) started making money, and under pressure of comparison with rapidly-growing competitors such as Barclays Capital
, saw major expansion in 2005-7, not least in private equity
loans and in the sub-prime mortgage market. It became one of the top three underwriters of collateralised debt obligation
s (CDOs). This increased exposure to the eventual "credit crunch" contributed to RBS's financial problems.
The third contributor to RBS's problems was its liquidity position. From a position c. 2002 where the bank was essentially 'fully funded' (i.e. was funding its lending positions fully from deposits gathered from customers), the rapid growth in lending within the GBM (Global Banking and Markets) division led to a reliance on external wholesale funding. The combination of this, along with the weak equity capital position, and the massive exposure to losses on CDOs via Greenwich, were the factors that destroyed RBS.
Following two rights issue
s in 2008, Goodwin resigned as Chief Executive. The bank experienced severe financial problems, and attempted to shore up its balance sheet with a £12bn share issue in April 2008, one of the largest in UK corporate history. The attempt to raise an additional £7bn capital by selling off insurers Churchill and Direct Line failed due to lack of interest in the context of the global liquidity crisis. Ultimately RBS was forced in October 2008 to rely on a UK Government bank rescue package
to support a shareholder recapitalisation of the bank, which resulted in the government owning a majority of the shares.
On 13 October 2008, as part of the arrangement for government support (of which Goodwin said "This isn’t a negotiation, it’s a drive-by shooting"), it was announced that Goodwin was to stand down as CEO, to be replaced by Stephen Hester
. Goodwin formally left RBS on 1 January 2009. According to the Daily Mail
, Goodwin had been 'regarded by analysts as among the most arrogant figures in the City'. The share price, when he became CEO of RBS, in January 2001, was 442p. After reaching £18 a share (equivalent to £6 per share after each share was split into three in May 2007), on the day of his departure it was announced that the share price was 65.70p reflecting share buybacks, rights issues as well as market valuation.
Despite these developments, the Daily Telegraph insisted that "his grasp of finance is in the Alpha class" and that he was "unlikely to be in the growing queue of jobless bankers" for long. In 2008/9, the RBS group was effectively nationalised: the UK Government owns nearly 70% of the ordinary shares of the company owing to its enormous debts. By January 2009 the share price was more than 98% down from its February 2007 peak.
subsidiary Lombard
for occasional corporate travel. Revelations that RBS had spent £200m on celebrity endorsements also went down badly.
In February 2009, RBS reported that while Sir Fred was at the helm it had posted a loss of £24.1bn, the biggest loss in UK corporate history. His responsibility for the expansion of RBS, which led to the losses, has drawn widespread criticism. During questioning by the Treasury Select Committee of the House of Commons on 10 February 2009, it emerged that Goodwin had no technical bank training and no formal banking qualifications.
In January 2009. The Guardian
s City editor Julia Finch identified him as one of twenty-five people who were at the heart of the financial meltdown. Nick Cohen
described Goodwin in The Observer
as "the characteristic villain of our day", who made £20m from RBS and left the taxpayer "with an unlimited liability for the cost of cleaning up the mess". An online column by Daniel Gross labelled Goodwin "The World's Worst Banker", a phrase repeated elsewhere in the media. Gordon Prentice
MP argued that his knighthood should be revoked as it is "wholly inappropriate and anomalous for someone to retain such a reward in these circumstances." A Labour MP from Scotland, Jim Sheridan, repeated the suggestion, and added that the police should investigate the activities of senior bankers.
In November 2009 as Goodwin emerged in public for the first time in months, it was revealed that he had hired Phil Hall
the former editor of Hello!
magazine, to help him rebuild his damaged reputation. Speaking to the Daily Mail
, Hall said "...he knows that what he did has caused problems...He is in a pretty difficult situation. He's not a criminal...You don't realise the impact all this is having on him and his family. He just wants to get his children through this - that's his only concern."
In September 2011, Alistair Darling
, the Chancellor of the Exchequer
at the time of the RBS collapse noted in leaked excerpts from his upcoming book,'Back From The Brink: 1,000 Days At No 11' that Sir Fred behaved "as if he was off to play a game of golf" while officials struggled to prevent a meltdown. Mr Darling describes the secret discussions which led to the Labour government effectively nationalising RBS and Sir Fred being heavily criticised for his management style and conduct and wrote that Goodwin “deserved to be a pariah”.
, RBS's new chairman, stated that as a result Goodwin is drawing £693,000 a year (later revised to £703,000 due to Goodwin working an extra month in the new financial year), and disclosed that under the RBS pension scheme Goodwin is entitled to draw the pension already, at age 50, because he had been asked to leave employment early, rather than having been dismissed. A pensions expert suggested that this meant Goodwin had received a substantial payoff from his early retirement, as it would cost around £25m to buy such a pension and his pension 'pot' amounted to £16m. When the matter became public in late February 2009, Goodwin defended his decision to refuse to reduce his pension entitlement in a letter to Lord Myners on 26 February, pointing out that on leaving in October 2008 he had given up a contractual 12-month notice period worth around £1.29m and share options worth around £300,000. In March 2009 Lord Myners revealed that part of the reason Goodwin's pension was so large was that RBS treated him as having joined the pension scheme from age 20 (instead of 40, when he actually joined) and ignored contributions to his pension from previous employment.
Stephen Timms
, a government finance minister, protested publicly about the matter. He said that it would be referred to the UK Financial Investments Limited
. The Chancellor, Alistair Darling
, ordered lawyers to explore legal avenues to recover the money, - though the legal options appear to be limited - and Prime Minister Gordon Brown
declared that "a very substantial part of it [Goodwin's pension] should be returned." Former deputy PM John Prescott
called on the government to withdraw Goodwin's pension and tell Goodwin to "sue if you dare." Liberal Democrats
Treasury spokesman Vince Cable said that "What the government could do is say that if the company had gone bust, which it would have had it not been a bank, he would have been entitled to a compassionate payout of £27,000 a year, and if he does not like that he could sue." Cable added that Goodwin "obviously has got no sense of shame."
In evidence to the Treasury Select Committee on 3 March 2009 John Kingman
, CEO of UK Financial Investments Ltd, the company set up to manage the government's holdings in banks, directly blamed the Royal Bank of Scotland board for awarding its former CEO a discretionary pension. Kingman said that the government was aware of the size of the pension pot in October 2008 (before UKFI was established), but that "what the government was not told was that this payment was in any way discretionary". He accused the RBS board of not sharing material facts with Financial Services Secretary Lord Myners. RBS could have terminated Sir Fred's contract as CEO with 12 months' notice, so avoiding the more expensive pension award. Kingman told the committee that UKFI was investigating whether RBS had "full knowledge of the alternatives" when it granted Sir Fred his pension. A letter from RBS setting out the background to the October 2008 decision on Goodwin's employment termination, the corporate approval process of the pension award and HM Treasury
involvement was submitted to the Treasury Select Committee. Had he been dismissed instead of accepting early retirement, the annual pension would have been £416,000, payable from age 60.
His home in Edinburgh
was vandalised on March 25, 2009 by an anti-banking group apparently known as "Bank Bosses Are Criminals" according to a newspaper who were sent details of the attack by the group. In their message, they said
Several windows in his house were smashed, and a car damaged in the drive below.
On 18 June 2009 RBS stated that following negotiation an agreement was reached between RBS and Goodwin to reduce his pension to £342,500 a year from the £555,000 set in February after he took out an estimated £2.7m tax-free lump sum. The agreement followed the completion of RBS' internal inquiry into Goodwin's conduct, which found no wrong-doing.
, a backbench
Liberal Democrat MP, referred in Parliament (under parliamentary privilege
) to the supposed existence of "a superinjunction
preventing [Goodwin] from being identified as a banker". As matters discussed in Parliament can be freely reported by the press, newspapers including The Guardian
, The Independent
, and The Daily Telegraph
, reported that Goodwin had obtained such an injunction, while still remaining unable to explain what information the injunction restricted the publication of.
On 19 May 2011, Lord Stoneham
, speaking in the House of Lords
, asked the Government "how can it be right for a super-injunction to hide the alleged relationship between Sir Fred Goodwin and a senior colleague?". Later that day, the High Court
varied the order, allowing Goodwin's name to be published, but continued it in relation to the identity of the lady involved. In his judgment, Mr Justice Tugendhat noted that the order had not been a superinjunction as it had been published in anonymised form on the British and Irish Legal Information Institute
website. He also stated that the injunction had not prevented Goodwin being identified as a banker, but instead prevented the person applying for the injunction from being identified as a banker, and that this was done because "if the applicant were identified as a banker that would be likely to lead to his being named, which would defeat the purpose of granting him anonymity". The judge criticised press reporting of the case as including "misleading and inaccurate statements".
s and the New Deal
programme. He is a former president of the Chartered Institute of Bankers in Scotland
. Goodwin became chairman of The Prince's Trust
in 2003. It was announced in January 2009 that his tenure would not be renewed for another three-year term, which he left in June 2009.
In January 2009 it was rumoured that Goodwin was being considered as a replacement for Max Mosley
as President of the FIA (Formula One
's governing body) as Mosley was due to step down in 2009. Goodwin, a motoring enthusiast, had been "instrumental" in RBS's sponsorship deal with the Williams Formula One team. In February 2009 RBS announced that the £10m-a-year deal, struck in 2005, would end in 2010, as part of a strategic review of all sponsorship activity.
, bought from the proceeds of a summer job; another, a Triumph Stag
he spent years restoring. He is also a keen golfer and Formula One
racing fan. Other pastimes include shooting - once a year he would go on shooting trips to Spain with Santander chairman Emilio Botín
.
In August 2011, Goodwin moved out of his family home after being asked to leave by his wife. The move followed media reports of his extra-marital affair with a colleague at the Royal Bank of Scotland.
|-
Chartered Accountant
Chartered Accountants were the first accountants to form a professional body, initially established in Britain in 1854. The Edinburgh Society of Accountants , the Glasgow Institute of Accountants and Actuaries and the Aberdeen Society of Accountants were each granted a royal charter almost from...
, FCIBS
Chartered Institute of Bankers in Scotland
The Chartered Institute of Bankers in Scotland , which is now known as the Chartered Banker Institute, was established in 1875 and is the oldest banking institute in the world and the only remaining banking institute in the UK. It aims to help rebuild public confidence in banks and banking by...
(born 17 August 1958) is a Scottish
Scottish people
The Scottish people , or Scots, are a nation and ethnic group native to Scotland. Historically they emerged from an amalgamation of the Picts and Gaels, incorporating neighbouring Britons to the south as well as invading Germanic peoples such as the Anglo-Saxons and the Norse.In modern use,...
chartered accountant
Chartered Accountant
Chartered Accountants were the first accountants to form a professional body, initially established in Britain in 1854. The Edinburgh Society of Accountants , the Glasgow Institute of Accountants and Actuaries and the Aberdeen Society of Accountants were each granted a royal charter almost from...
and former banker who was chief executive of the Royal Bank of Scotland Group (RBS) between 2001 and 2009.
From 2000 until 2008 he presided over RBS's rapid rise to global prominence as the world's largest company (by assets - £1.9 trillion), and fifth-largest bank by stock market value and its even more rapid fall as RBS was forced into effective nationalisation in 2008.
On October 11, 2008, Goodwin officially announced his resignation as Chief Executive and an early retirement, effective from January 31, 2009 - a month before RBS announced that its 2008 loss totalled £24.1bn, the largest annual loss in UK corporate history. Following the February 2009 disclosure of his approximately £700,000 per year pension award from RBS he was the subject of widespread public, political and media criticism.
From January 2010 he was employed as a senior adviser to RMJM
RMJM
RMJM is an international architectural practice founded in Edinburgh, Scotland in 1956 by architects Robert Matthew and Stirrat Johnson-Marshall. The first offices of the practice were its headquarters in Edinburgh, and another in London...
, an international architecture firm. He left the position after less than a year.
Biography and career
Born in PaisleyPaisley
Paisley is the largest town in the historic county of Renfrewshire in the west central Lowlands of Scotland and serves as the administrative centre for the Renfrewshire council area...
, Renfrewshire
Renfrewshire
Renfrewshire is one of 32 council areas used for local government in Scotland. Located in the west central Lowlands, it is one of three council areas contained within the boundaries of the historic county of Renfrewshire, the others being Inverclyde to the west and East Renfrewshire to the east...
, Goodwin is the son of a Scottish electrician
Electrician
An electrician is a tradesman specializing in electrical wiring of buildings, stationary machines and related equipment. Electricians may be employed in the installation of new electrical components or the maintenance and repair of existing electrical infrastructure. Electricians may also...
and was the first of his family to go to university, attending Paisley Grammar School
Paisley Grammar School
Paisley Grammar School, known for a period following 1896 as the Paisley Grammar School and William B. Barbour Academy, is a non-denominational state comprehensive secondary school in Paisley, the largest town in Renfrewshire, Scotland. The school was founded in 1576 and was formerly a selective...
before studying law at Glasgow University. He joined accountants Touche Ross
Deloitte Touche Tohmatsu
Deloitte Touche Tohmatsu Limited , commonly referred to as Deloitte, is one of the Big Four accountancy firms along with PricewaterhouseCoopers , Ernst & Young, and KPMG....
, and qualified as a chartered accountant
Chartered Accountant
Chartered Accountants were the first accountants to form a professional body, initially established in Britain in 1854. The Edinburgh Society of Accountants , the Glasgow Institute of Accountants and Actuaries and the Aberdeen Society of Accountants were each granted a royal charter almost from...
in 1983. Between 1985 and 1987 he was part of a Touche Ross management consultant team at Rosyth Dockyard
Rosyth Dockyard
Rosyth Dockyard is a large naval dockyard on the Firth of Forth at Rosyth, Fife, Scotland, owned by Babcock Marine, which primarily undertakes refitting of Royal Navy surface vessels.-History:...
, and became a partner in Touche Ross in 1988. He was appointed a director of Short Brothers
Short Brothers
Short Brothers plc is a British aerospace company, usually referred to simply as Shorts, that is now based in Belfast, Northern Ireland. Founded in 1908, Shorts was the first company in the world to make production aircraft and was a manufacturer of flying boats during the 1920s, 1930s, and 1940s...
, and tasked with preparing the largest industrial employer in Northern Ireland for its 1989 privatisation. For Touche Ross he headed the worldwide liquidation of Bank of Credit and Commerce International
Bank of Credit and Commerce International
The Bank of Credit and Commerce International was a major international bank founded in 1972 by Agha Hasan Abedi, a Pakistani financier. The Bank was registered in Luxembourg with head offices in Karachi and London. Within a decade BCCI touched its peak...
after its collapse in July 1991. At 32, Goodwin was in charge of 1,000 people with teams from London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
to Abu Dhabi
Abu Dhabi
Abu Dhabi , literally Father of Gazelle, is the capital and the second largest city of the United Arab Emirates in terms of population and the largest of the seven member emirates of the United Arab Emirates. Abu Dhabi lies on a T-shaped island jutting into the Persian Gulf from the central western...
and the Cayman Islands
Cayman Islands
The Cayman Islands is a British Overseas Territory and overseas territory of the European Union located in the western Caribbean Sea. The territory comprises the three islands of Grand Cayman, Cayman Brac, and Little Cayman, located south of Cuba and northwest of Jamaica...
that eventually returned over half the money from one of the most complicated, high-profile financial frauds ever.
His move into banking came through his work at Touche Ross with the National Australia Bank
National Australia Bank
National Australia Bank is one of the four largest financial institutions in Australia in terms of market capitalisation and customers. NAB is ranked 17th largest bank in the world measured by market capitalisation...
, contributing due diligence
Due diligence
"Due diligence" is a term used for a number of concepts involving either an investigation of a business or person prior to signing a contract, or an act with a certain standard of care. It can be a legal obligation, but the term will more commonly apply to voluntary investigations...
to its 1987 takeover of Clydesdale Bank
Clydesdale Bank
Clydesdale Bank is a commercial bank in Scotland, a subsidiary of the National Australia Bank Group. In Scotland, Clydesdale Bank is the third largest clearing bank, although it also retains a branch network in London and the north of England...
from the then Midland Bank
Midland Bank
Midland Bank Plc was one of the Big Four banking groups in the United Kingdom for most of the 20th century. It is now part of HSBC. The bank was founded as the Birmingham and Midland Bank in Union Street, Birmingham, England in August 1836...
and again with its 1995 takeover of Yorkshire Bank
Yorkshire Bank
Yorkshire Bank is a commercial bank in England and Wales, a division of Clydesdale Bank, which in turn is a subsidiary of National Australia Bank. It mostly operates in the North of England, especially in Yorkshire. In 2006 underlying profit rose 16.7 per cent to £454 million compared with a...
. During work on the latter he caught the eye of National Australia Bank executive Don Argus, and was invited to become deputy chief executive of Clydesdale in 1995, and as per his "five-second rule", accepted on the spot rising to chief executive of National Australia's British banking operations in 1996. Around this time he gained the moniker "Fred the Shred" from City
City of London
The City of London is a small area within Greater London, England. It is the historic core of London around which the modern conurbation grew and has held city status since time immemorial. The City’s boundaries have remained almost unchanged since the Middle Ages, and it is now only a tiny part of...
financiers, reflecting a reputation for ruthlessly generating cost savings and efficiencies whilst at Clydesdale. He was later described as "a corporate Attila", having gained a reputation in the City for being a fearsome outsider - being Scottish, and not educated at a public school
Public School (UK)
A public school, in common British usage, is a school that is neither administered nor financed by the state or from taxpayer contributions, and is instead funded by a combination of endowments, tuition fees and charitable contributions, usually existing as a non profit-making charitable trust...
or at Oxbridge
Oxbridge
Oxbridge is a portmanteau of the University of Oxford and the University of Cambridge in England, and the term is now used to refer to them collectively, often with implications of perceived superior social status...
- who made raids in the south and abroad when it suited him.
He joined Royal Bank of Scotland in 1998 as deputy CEO to then-CEO Sir George Mathewson
George Mathewson
Sir George Mathewson is a Scottish businessman. His father was an electrical engineer. He was educated at Perth Academy and the University of St Andrews' Queen's College in Dundee, from where he graduated in 1961 with a degree in mathematics and applied physics...
, who had ambitions to make RBS a major player rather than a regional bank. RBS made waves in 2000 with its £23.6bn takeover of NatWest, a bank three times its size. Although Goodwin's predecessor Mathewson led the deal, it was Goodwin's diligence and ability to impress investors which secured it against fierce competition from the Bank of Scotland
Bank of Scotland
The Bank of Scotland plc is a commercial and clearing bank based in Edinburgh, Scotland. With a history dating to the 17th century, it is the second oldest surviving bank in what is now the United Kingdom, and is the only commercial institution created by the Parliament of Scotland to...
. The Sunday Times wrote that "The NatWest deal was the making of Goodwin," with Goodwin promoted to CEO in January 2001, soon after it was secured, dedicated to continuing Mathewson's vision. Goodwin lived up to his reputation, cutting 18,000 jobs by merging parts of RBS and NatWest.
Expansion
First Active
First Active was an Irish bank, and former building society which was merged in to Ulster Bank in late 2009, ceasing trading in February 2010. It traditionally offered a range of mortgages, savings, investment, pension and life assurance products, but from 2007 onwards, also offered credit...
and UK insurers Churchill Insurance and Direct Line
Direct Line
Direct Line is part of the RBS Insurance division of the Royal Bank of Scotland Group that specialises in selling insurance and other financial services over the phone and internet....
. During negotiations with Credit Suisse
Credit Suisse
The Credit Suisse Group AG is a Swiss multinational financial services company headquartered in Zurich, with more than 250 branches in Switzerland and operations in more than 50 countries.-History:...
over the acquisition of Churchill, it is said that Goodwin maintained silence for an hour at lunch with Credit Suisse's CEO, supporting his demand for indemnity against any potential losses from with the associated The Accident Group
The Accident Group
The Accident Group was a Manchester based personal injury claims management company that went into administration in May 2003. The firm gained notoriety for informing its 2,400 workers of their redundancy by text message, which, according to BBC reports, led to the firm's offices being emptied of...
, which would collapse soon after. He got his way. RBS also bulked up its US
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
Citizens Financial Group
Citizens Financial Group
Citizens Financial Group, Inc. is an American bank headquartered in Providence, Rhode Island, which operates in the states of Connecticut, Delaware, Illinois, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Vermont. Citizens is a wholly owned...
, Inc arm with a string of further deals. Then in May 2004, RBS said it would purchase Charter One Financial Inc. of Cleveland, Ohio for $10.5 billion. The deal, at a price "widely considered too high" spread the RBS's banking web across the Midwest
Midwestern United States
The Midwestern United States is one of the four U.S. geographic regions defined by the United States Census Bureau, providing an official definition of the American Midwest....
for the first time, and made its U.S. banking operations No. 7 in the United States.
From the time that Goodwin took over as chief executive until 2007, RBS's assets quadrupled, its cost-to-income ratio improved markedly, and its profits soared. In 2006 pre-tax profits climbed 16% to £9.2 billion with significant growth coming from its investment banking
Investment banking
An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities...
business. By 2008 RBS was the fifth-largest bank in the world by market capitalisation. One of the factors in its rise was its enthusiasm for supporting leveraged buyouts. In 2008 it lent $9.3bn, more than double its nearest rival.
However, following investor unrest in the build-up to RBS's acquisition of a $1.6bn minority stake in Bank of China
Bank of China
Bank of China Limited is one of the big four state-owned commercial banks of the People's Republic of China. It was founded in 1912 by the Government of the Republic of China, to replace the Government Bank of Imperial China. It is the oldest bank in China...
in 2005 Goodwin was criticised by some RBS shareholders for putting global expansion ahead of short-term financial returns. Between 2002 and 2005 the share price plateaued at around £17 per share, having nearly trebled between February 2000 and May 2002. Goodwin was accused of megalomania
Megalomania
Megalomania is a psycho-pathological condition characterized by delusional fantasies of power, relevance, or omnipotence. 'Megalomania is characterized by an inflated sense of self-esteem and overestimation by persons of their powers and beliefs'...
by some shareholders, as reported by Dresdner Kleinwort
Dresdner Kleinwort
Dresdner Kleinwort was a British-based investment bank: it disappeared as a brand from the world of investment banking in September 2009, when its remaining businesses adopted the Commerzbank branding.-History:...
analyst James Eden (who said he thought the label was 'unwarranted'). After the Bank of China deal, he was forced to promise RBS shareholders he would not indulge in any further big acquisitions and focus instead on growing the group organically.
However, in early 2007 Dutch bank ABN Amro
ABN AMRO
ABN AMRO Bank N.V. is a Dutch state-owned bank with headquarters in Amsterdam. It was re-established, in its current form, in 2009 following the acquisition and break up of ABN AMRO Group by a banking consortium consisting of Royal Bank of Scotland Group, Santander and Fortis...
was under pressure from hedge fund
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...
s, including Chris Hohn of the hedge fund TCI
The Children's Investment Fund
The Children’s Investment Fund Management LLP is a London‐based hedge fund founded by Chris Hohn in 2003 which manages The Children’s Investment Master Fund. TCI makes long‐term investments in companies globally...
, to break itself up in order to maximise shareholder value. ABN chief executive Rijkman Groenink suspected RBS of acting in concert with the hedge fund Tosca, which was chaired by former RBS Chairman Mathewson and recommended the takeover bid of an RBS consortium, against the proposed merger with Barclays Bank. Goodwin arranged a consortium of RBS, Fortis
Fortis (finance)
Fortis N.V./S.A. was a company active in insurance, banking and investment management. In 2007 it was the 20th largest business in the world by revenue but after encountering severe problems in the financial crisis of 2008, most of the company was sold in parts, with only insurance activities...
and former RBS shareholders Grupo Santander
Grupo Santander
The Santander Group is a banking group centered on Banco Santander, S.A., the largest bank in the Eurozone and one of the largest banks in the world in terms of market capitalisation. According to Forbes Magazine Global 2000, it is the 13th largest public company in the world...
, to purchase the assets of ABN Amro and break them up in a three-way split. According to the proposed deal, RBS would take over ABN's Chicago operations, LaSalle Bank
LaSalle Bank
LaSalle Bank Corporation was the holding company for LaSalle Bank N.A. and LaSalle Bank Midwest N.A. . With $116 billion in assets, it was headquartered at 135 South LaSalle Street in Chicago, Illinois...
, and ABN's wholesale operations; while Santander would take the Brazilian operations and Fortis the Dutch operations. In a manoeuvre "labelled in all quarters as a poison pill
Poison pill
A shareholder rights plan, colloquially known as a "poison pill", or simply "the pill" is a type of defensive tactic used by a corporation's board of directors against a takeover...
" ABN Amro agreed to sell key RBS target LaSalle to Bank of America
Bank of America
Bank of America Corporation, an American multinational banking and financial services corporation, is the second largest bank holding company in the United States by assets, and the fourth largest bank in the U.S. by market capitalization. The bank is headquartered in Charlotte, North Carolina...
for $21bn, but in July 2007 the consortium offered the same $98bn for ABN's remaining assets, with a higher cash component (93%). The deal was struck in October 2007 as the global liquidity crisis began to develop, with Barclays withdrawing its EUR61bn bid and ABN's shareholders endorsing the EUR71bn RBS takeover. Coming after the nationalisation of Northern Rock
Northern Rock
Northern Rock plc is a British bank, best known for becoming the first bank in 150 years to suffer a bank run after having had to approach the Bank of England for a loan facility, to replace money market funding, during the credit crisis in 2007. Having failed to find a commercial buyer for...
due to the freezing of the wholesale money markets, the deal proved the final straw for RBS, as it severely weakened its balance sheet not only through the size of the acquisition but due to ABN Amro's substantial exposure to the US subprime mortgage crisis
Subprime mortgage crisis
The U.S. subprime mortgage crisis was one of the first indicators of the late-2000s financial crisis, characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages....
.
Collapse
Goodwin's strategy of aggressive expansion primarily through acquisition, including the takeover of ABN AMROABN AMRO
ABN AMRO Bank N.V. is a Dutch state-owned bank with headquarters in Amsterdam. It was re-established, in its current form, in 2009 following the acquisition and break up of ABN AMRO Group by a banking consortium consisting of Royal Bank of Scotland Group, Santander and Fortis...
, eventually proved disastrous and led to the near-collapse of RBS in the October 2008 liquidity crisis. The EUR 71bn (£55bn) ABN AMRO deal (of which RBS's share was £10bn ) in particular stretched the bank's capital position - £16.8bn of RBS's record £24.1bn loss is attributed to writedowns relating to the takeover of ABN AMRO.
It was not, however, the sole source of RBS's problems, as RBS was exposed to the liquidity crisis in a number of ways, particularly through US subsidiaries including RBS Greenwich Capital
RBS Greenwich Capital
RBS Securities Inc. is the Royal Bank of Scotland Group's U.S. investment bank/broker-dealer based in Stamford, Connecticut that specializes in fixed income arbitrage and other fixed income strategies...
. Although the takeover of NatWest launched RBS's meteoric rise, it came with an investment bank subsidiary, Greenwich NatWest. RBS was unable to dispose of it as planned as a result of the involvement of the NatWest Three
NatWest Three
The NatWest Three, also known as the Enron Three, are three British businessmen - Giles Darby, David Bermingham and Gary Mulgrew. In 2002 they were indicted in Houston, Texas on seven counts of wire fraud against their former employer Greenwich NatWest, at the time a division of National...
in the collapse of Enron
Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. Before its bankruptcy on December 2, 2001, Enron employed approximately 22,000 staff and was one of the world's leading electricity, natural gas, communications, and pulp and paper companies, with...
. However the business (now RBS Greenwich Capital
RBS Greenwich Capital
RBS Securities Inc. is the Royal Bank of Scotland Group's U.S. investment bank/broker-dealer based in Stamford, Connecticut that specializes in fixed income arbitrage and other fixed income strategies...
) started making money, and under pressure of comparison with rapidly-growing competitors such as Barclays Capital
Barclays Capital
Barclays Capital is a global British investment bank. It is the investment banking division of Barclays plc which has a balance sheet of over £1.2 trillion . Barclays Capital provides financing and risk management services to large companies, institutions and government clients. It is a primary...
, saw major expansion in 2005-7, not least in private equity
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
loans and in the sub-prime mortgage market. It became one of the top three underwriters of collateralised debt obligation
Collateralized debt obligation
Collateralized debt obligations are a type of structured asset-backed security with multiple "tranches" that are issued by special purpose entities and collateralized by debt obligations including bonds and loans. Each tranche offers a varying degree of risk and return so as to meet investor demand...
s (CDOs). This increased exposure to the eventual "credit crunch" contributed to RBS's financial problems.
The third contributor to RBS's problems was its liquidity position. From a position c. 2002 where the bank was essentially 'fully funded' (i.e. was funding its lending positions fully from deposits gathered from customers), the rapid growth in lending within the GBM (Global Banking and Markets) division led to a reliance on external wholesale funding. The combination of this, along with the weak equity capital position, and the massive exposure to losses on CDOs via Greenwich, were the factors that destroyed RBS.
Following two rights issue
Rights issue
A rights issue is an issue of additional shares by a company to raise capital under a seasoned equity offering. The rights issue is a special form of shelf offering or shelf registration. With the issued rights, existing shareholders have the privilege to buy a specified number of new shares from...
s in 2008, Goodwin resigned as Chief Executive. The bank experienced severe financial problems, and attempted to shore up its balance sheet with a £12bn share issue in April 2008, one of the largest in UK corporate history. The attempt to raise an additional £7bn capital by selling off insurers Churchill and Direct Line failed due to lack of interest in the context of the global liquidity crisis. Ultimately RBS was forced in October 2008 to rely on a UK Government bank rescue package
2008 United Kingdom bank rescue package
A bank rescue package totalling some £500 billion was announced by the British government on 8 October 2008, as a response to the ongoing global financial crisis. After two unsteady weeks at the end of September, the first week of October had seen major falls in the stock market and severe worries...
to support a shareholder recapitalisation of the bank, which resulted in the government owning a majority of the shares.
On 13 October 2008, as part of the arrangement for government support (of which Goodwin said "This isn’t a negotiation, it’s a drive-by shooting"), it was announced that Goodwin was to stand down as CEO, to be replaced by Stephen Hester
Stephen Hester
Stephen Hester , is currently the Chief Executive Officer of The Royal Bank of Scotland Group.-Early life:Hester is the eldest son of a university professor...
. Goodwin formally left RBS on 1 January 2009. According to the Daily Mail
Daily Mail
The Daily Mail is a British daily middle-market tabloid newspaper owned by the Daily Mail and General Trust. First published in 1896 by Lord Northcliffe, it is the United Kingdom's second biggest-selling daily newspaper after The Sun. Its sister paper The Mail on Sunday was launched in 1982...
, Goodwin had been 'regarded by analysts as among the most arrogant figures in the City'. The share price, when he became CEO of RBS, in January 2001, was 442p. After reaching £18 a share (equivalent to £6 per share after each share was split into three in May 2007), on the day of his departure it was announced that the share price was 65.70p reflecting share buybacks, rights issues as well as market valuation.
Despite these developments, the Daily Telegraph insisted that "his grasp of finance is in the Alpha class" and that he was "unlikely to be in the growing queue of jobless bankers" for long. In 2008/9, the RBS group was effectively nationalised: the UK Government owns nearly 70% of the ordinary shares of the company owing to its enormous debts. By January 2009 the share price was more than 98% down from its February 2007 peak.
Awards
- December 2002 - ForbesForbesForbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...
(global edition) "Businessman of the Year", which described him as an original thinker with a fast-forward frame of mind who had transformed RBS from a nonentity into a global name. - 2003 - 2006 - No.1 in Scotland on SundayScotland on SundayScotland on Sunday is a Scottish Sunday newspaper, published in Edinburgh by The Scotsman Publications Ltd and consequently assuming the role of Sunday sister to its daily stablemate The Scotsman...
s Power 100 - December 2003 - "European Banker of the Year" in 2003
- June 2004 - Knighted in the Queen's 2004 Birthday Honours list, for services to banking.
- July 2008 - awarded an honorary fellowship by the London Business SchoolLondon Business SchoolLondon Business School is an international business school and a constituent college of the federal University of London, located in central London, beside Regent's Park...
Media commentary and criticism
During Goodwin's tenure as CEO he attracted some criticism for lavish spending, including expenditure on the construction of a £350m headquarters at Gogarburn outside Edinburgh opened by the Queen in 2005 (described by one commentator as "comically expensive",) and $500m headquarters in the US begun in 2006 as well as the use of a Dassault Falcon 900 jet owned by RBS leasingLeasing
Leasing is a process by which a firm can obtain the use of a certain fixed assets for which it must pay a series of contractual, periodic, tax deductible payments....
subsidiary Lombard
Lombard Direct
Lombard Direct is a British-based finance company that specialise in loans and insurance, founded in 1995. It is one of the largest finance houses in the United Kingdom and is now a member of the Royal Bank of Scotland group....
for occasional corporate travel. Revelations that RBS had spent £200m on celebrity endorsements also went down badly.
In February 2009, RBS reported that while Sir Fred was at the helm it had posted a loss of £24.1bn, the biggest loss in UK corporate history. His responsibility for the expansion of RBS, which led to the losses, has drawn widespread criticism. During questioning by the Treasury Select Committee of the House of Commons on 10 February 2009, it emerged that Goodwin had no technical bank training and no formal banking qualifications.
In January 2009. The Guardian
The Guardian
The Guardian, formerly known as The Manchester Guardian , is a British national daily newspaper in the Berliner format...
s City editor Julia Finch identified him as one of twenty-five people who were at the heart of the financial meltdown. Nick Cohen
Nick Cohen
Nick Cohen is a British journalist, author and political commentator. He is currently a columnist for The Observer, a blogger for The Spectator and TV critic for Standpoint magazine. He formerly wrote for the London Evening Standard and the New Statesman...
described Goodwin in The Observer
The Observer
The Observer is a British newspaper, published on Sundays. In the same place on the political spectrum as its daily sister paper The Guardian, which acquired it in 1993, it takes a liberal or social democratic line on most issues. It is the world's oldest Sunday newspaper.-Origins:The first issue,...
as "the characteristic villain of our day", who made £20m from RBS and left the taxpayer "with an unlimited liability for the cost of cleaning up the mess". An online column by Daniel Gross labelled Goodwin "The World's Worst Banker", a phrase repeated elsewhere in the media. Gordon Prentice
Gordon Prentice
Gordon Prentice is a British Labour Party politician who was the Member of Parliament for Pendle in Lancashire from 1992 to 2010.-Early life:...
MP argued that his knighthood should be revoked as it is "wholly inappropriate and anomalous for someone to retain such a reward in these circumstances." A Labour MP from Scotland, Jim Sheridan, repeated the suggestion, and added that the police should investigate the activities of senior bankers.
In November 2009 as Goodwin emerged in public for the first time in months, it was revealed that he had hired Phil Hall
Phil Hall (journalist)
Phil Hall is a British PR consultant and former newspaper editor.Hall entered journalism in 1974, as a reporter on the Dagenham Post. He then moved to the Ilford Recorder and subsequently filled a sub-editor post on the Newham Recorder, but returned to reporting at the Sunday People...
the former editor of Hello!
Hello!
Hello is a weekly magazine specializing in celebrity news and human-interest stories, published in the United Kingdom since 1988. Hello is sister magazine to ¡Hola!, the Spanish weekly magazine launched in Spain in 1944...
magazine, to help him rebuild his damaged reputation. Speaking to the Daily Mail
Daily Mail
The Daily Mail is a British daily middle-market tabloid newspaper owned by the Daily Mail and General Trust. First published in 1896 by Lord Northcliffe, it is the United Kingdom's second biggest-selling daily newspaper after The Sun. Its sister paper The Mail on Sunday was launched in 1982...
, Hall said "...he knows that what he did has caused problems...He is in a pretty difficult situation. He's not a criminal...You don't realise the impact all this is having on him and his family. He just wants to get his children through this - that's his only concern."
In September 2011, Alistair Darling
Alistair Darling
Alistair Maclean Darling is a Scottish Labour Party politician who has been a Member of Parliament since 1987, currently for Edinburgh South West. He served as the Chancellor of the Exchequer from 2007 to 2010...
, the Chancellor of the Exchequer
Chancellor of the Exchequer
The Chancellor of the Exchequer is the title held by the British Cabinet minister who is responsible for all economic and financial matters. Often simply called the Chancellor, the office-holder controls HM Treasury and plays a role akin to the posts of Minister of Finance or Secretary of the...
at the time of the RBS collapse noted in leaked excerpts from his upcoming book,'Back From The Brink: 1,000 Days At No 11' that Sir Fred behaved "as if he was off to play a game of golf" while officials struggled to prevent a meltdown. Mr Darling describes the secret discussions which led to the Labour government effectively nationalising RBS and Sir Fred being heavily criticised for his management style and conduct and wrote that Goodwin “deserved to be a pariah”.
Size of pension
Media and government criticism increased on disclosure in February 2009 of the size of Goodwin's pension. The treasury minister Lord Myners had indicated to RBS that there should be "no reward for failure", but Goodwin's pension entitlement, represented by a notional fund of £8m, was doubled, to a notional fund of £16m or more, because under the terms of the scheme he was entitled to receive, at age 50, benefits which would otherwise have been available to him only if he had worked until age 60. Sir Philip HamptonPhilip Hampton
Sir Philip Roy Hampton is the chairman of the Royal Bank of Scotland. Originally he joined RBS as the deputy chairman on the 19th of January 2009 and was promoted to chairman on the 3rd of February the same year...
, RBS's new chairman, stated that as a result Goodwin is drawing £693,000 a year (later revised to £703,000 due to Goodwin working an extra month in the new financial year), and disclosed that under the RBS pension scheme Goodwin is entitled to draw the pension already, at age 50, because he had been asked to leave employment early, rather than having been dismissed. A pensions expert suggested that this meant Goodwin had received a substantial payoff from his early retirement, as it would cost around £25m to buy such a pension and his pension 'pot' amounted to £16m. When the matter became public in late February 2009, Goodwin defended his decision to refuse to reduce his pension entitlement in a letter to Lord Myners on 26 February, pointing out that on leaving in October 2008 he had given up a contractual 12-month notice period worth around £1.29m and share options worth around £300,000. In March 2009 Lord Myners revealed that part of the reason Goodwin's pension was so large was that RBS treated him as having joined the pension scheme from age 20 (instead of 40, when he actually joined) and ignored contributions to his pension from previous employment.
Stephen Timms
Stephen Timms
Stephen Creswell Timms is a British Labour politician, who has been the Member of Parliament for East Ham since 1994. He is a former Cabinet Minister having served as Chief Secretary to the Treasury from 2006 to 2007...
, a government finance minister, protested publicly about the matter. He said that it would be referred to the UK Financial Investments Limited
UK Financial Investments Limited
UK Financial Investments Ltd is a company set up in November 2008 by the UK Government to manage its shareholding in banks subscribing to its recapitalisation fund. They include Lloyds Banking Group , Royal Bank of Scotland Group and Northern Rock...
. The Chancellor, Alistair Darling
Alistair Darling
Alistair Maclean Darling is a Scottish Labour Party politician who has been a Member of Parliament since 1987, currently for Edinburgh South West. He served as the Chancellor of the Exchequer from 2007 to 2010...
, ordered lawyers to explore legal avenues to recover the money, - though the legal options appear to be limited - and Prime Minister Gordon Brown
Gordon Brown
James Gordon Brown is a British Labour Party politician who was the Prime Minister of the United Kingdom and Leader of the Labour Party from 2007 until 2010. He previously served as Chancellor of the Exchequer in the Labour Government from 1997 to 2007...
declared that "a very substantial part of it [Goodwin's pension] should be returned." Former deputy PM John Prescott
John Prescott
John Leslie Prescott, Baron Prescott is a British politician who was Deputy Prime Minister of the United Kingdom from 1997 to 2007. Born in Prestatyn, Wales, he represented Hull East as the Labour Member of Parliament from 1970 to 2010...
called on the government to withdraw Goodwin's pension and tell Goodwin to "sue if you dare." Liberal Democrats
Liberal Democrats
The Liberal Democrats are a social liberal political party in the United Kingdom which supports constitutional and electoral reform, progressive taxation, wealth taxation, human rights laws, cultural liberalism, banking reform and civil liberties .The party was formed in 1988 by a merger of the...
Treasury spokesman Vince Cable said that "What the government could do is say that if the company had gone bust, which it would have had it not been a bank, he would have been entitled to a compassionate payout of £27,000 a year, and if he does not like that he could sue." Cable added that Goodwin "obviously has got no sense of shame."
In evidence to the Treasury Select Committee on 3 March 2009 John Kingman
John Oliver Frank Kingman
John Oliver Frank Kingman is a civil servant, and is the son of Sir John Frank Charles Kingman.He was Second Permanent Secretary and managing director, public services and growth directorate at HM Treasury. On 3 November, 2008 he was appointed as chief executive of UK Financial Investments...
, CEO of UK Financial Investments Ltd, the company set up to manage the government's holdings in banks, directly blamed the Royal Bank of Scotland board for awarding its former CEO a discretionary pension. Kingman said that the government was aware of the size of the pension pot in October 2008 (before UKFI was established), but that "what the government was not told was that this payment was in any way discretionary". He accused the RBS board of not sharing material facts with Financial Services Secretary Lord Myners. RBS could have terminated Sir Fred's contract as CEO with 12 months' notice, so avoiding the more expensive pension award. Kingman told the committee that UKFI was investigating whether RBS had "full knowledge of the alternatives" when it granted Sir Fred his pension. A letter from RBS setting out the background to the October 2008 decision on Goodwin's employment termination, the corporate approval process of the pension award and HM Treasury
HM Treasury
HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy...
involvement was submitted to the Treasury Select Committee. Had he been dismissed instead of accepting early retirement, the annual pension would have been £416,000, payable from age 60.
His home in Edinburgh
Edinburgh
Edinburgh is the capital city of Scotland, the second largest city in Scotland, and the eighth most populous in the United Kingdom. The City of Edinburgh Council governs one of Scotland's 32 local government council areas. The council area includes urban Edinburgh and a rural area...
was vandalised on March 25, 2009 by an anti-banking group apparently known as "Bank Bosses Are Criminals" according to a newspaper who were sent details of the attack by the group. In their message, they said
Several windows in his house were smashed, and a car damaged in the drive below.
On 18 June 2009 RBS stated that following negotiation an agreement was reached between RBS and Goodwin to reduce his pension to £342,500 a year from the £555,000 set in February after he took out an estimated £2.7m tax-free lump sum. The agreement followed the completion of RBS' internal inquiry into Goodwin's conduct, which found no wrong-doing.
Super injunction
On 10 March 2011, John HemmingJohn Hemming (politician)
John Alexander Melvin Hemming is a British politician, the Member of Parliament for Birmingham Yardley and Group Chair of the Liberal Democrats on the city council of Birmingham, England....
, a backbench
Backbencher
In Westminster parliamentary systems, a backbencher is a Member of Parliament or a legislator who does not hold governmental office and is not a Front Bench spokesperson in the Opposition...
Liberal Democrat MP, referred in Parliament (under parliamentary privilege
Parliamentary privilege
Parliamentary privilege is a legal immunity enjoyed by members of certain legislatures, in which legislators are granted protection against civil or criminal liability for actions done or statements made related to one's duties as a legislator. It is common in countries whose constitutions are...
) to the supposed existence of "a superinjunction
2011 British super-injunction controversy
The British privacy injunctions controversy began in early 2011, when London-based tabloid newspapers published stories about anonymous celebrities that were intended to flout what are commonly known in English law as super-injunctions, where the claimant could not be named, and carefully omitting...
preventing [Goodwin] from being identified as a banker". As matters discussed in Parliament can be freely reported by the press, newspapers including The Guardian
The Guardian
The Guardian, formerly known as The Manchester Guardian , is a British national daily newspaper in the Berliner format...
, The Independent
The Independent
The Independent is a British national morning newspaper published in London by Independent Print Limited, owned by Alexander Lebedev since 2010. It is nicknamed the Indy, while the Sunday edition, The Independent on Sunday, is the Sindy. Launched in 1986, it is one of the youngest UK national daily...
, and The Daily Telegraph
The Daily Telegraph
The Daily Telegraph is a daily morning broadsheet newspaper distributed throughout the United Kingdom and internationally. The newspaper was founded by Arthur B...
, reported that Goodwin had obtained such an injunction, while still remaining unable to explain what information the injunction restricted the publication of.
On 19 May 2011, Lord Stoneham
Ben Stoneham, Baron Stoneham of Droxford
Benjamin Russell Mackintosh Stoneham, Baron Stoneham of Droxford is a British peer, journalist, and politician.Stoneham's early politics were Labour. At the age of 29 he was Labour candidate in the Saffron Walden by-election of 1977. He was later treasurer of the moderate Campaign for Labour...
, speaking in the House of Lords
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....
, asked the Government "how can it be right for a super-injunction to hide the alleged relationship between Sir Fred Goodwin and a senior colleague?". Later that day, the High Court
High Court of Justice
The High Court of Justice is, together with the Court of Appeal and the Crown Court, one of the Senior Courts of England and Wales...
varied the order, allowing Goodwin's name to be published, but continued it in relation to the identity of the lady involved. In his judgment, Mr Justice Tugendhat noted that the order had not been a superinjunction as it had been published in anonymised form on the British and Irish Legal Information Institute
British and Irish Legal Information Institute
The British and Irish Legal Information Institute is an on-line database of British and Irish legislation and case law.. It provides free access to publicly available legal information...
website. He also stated that the injunction had not prevented Goodwin being identified as a banker, but instead prevented the person applying for the injunction from being identified as a banker, and that this was done because "if the applicant were identified as a banker that would be likely to lead to his being named, which would defeat the purpose of granting him anonymity". The judge criticised press reporting of the case as including "misleading and inaccurate statements".
Other activities
Goodwin has chaired various government task forces including one examining the work of credit unionCredit union
A credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members...
s and the New Deal
New Deal (UK)
The New Deal is a programme of active labour market policies introduced in the United Kingdom by the Labour government in 1998, initially funded by a one off £5bn windfall tax on privatised utility companies. The stated purpose is to reduce unemployment by providing training, subsidised employment...
programme. He is a former president of the Chartered Institute of Bankers in Scotland
Chartered Institute of Bankers in Scotland
The Chartered Institute of Bankers in Scotland , which is now known as the Chartered Banker Institute, was established in 1875 and is the oldest banking institute in the world and the only remaining banking institute in the UK. It aims to help rebuild public confidence in banks and banking by...
. Goodwin became chairman of The Prince's Trust
The Prince's Trust
The Prince's Trust is a charity in the United Kingdom founded in 1976 by Charles, Prince of Wales to help young people. They run a range of training programmes, provide mentoring support and offer financial grants to build the confidence and motivation of disadvantaged young people...
in 2003. It was announced in January 2009 that his tenure would not be renewed for another three-year term, which he left in June 2009.
In January 2009 it was rumoured that Goodwin was being considered as a replacement for Max Mosley
Max Mosley
Max Rufus Mosley is the former president of the Fédération Internationale de l'Automobile , a non-profit association that represents the interests of motoring organisations and car users worldwide...
as President of the FIA (Formula One
Formula One
Formula One, also known as Formula 1 or F1 and referred to officially as the FIA Formula One World Championship, is the highest class of single seater auto racing sanctioned by the Fédération Internationale de l'Automobile . The "formula" designation in the name refers to a set of rules with which...
's governing body) as Mosley was due to step down in 2009. Goodwin, a motoring enthusiast, had been "instrumental" in RBS's sponsorship deal with the Williams Formula One team. In February 2009 RBS announced that the £10m-a-year deal, struck in 2005, would end in 2010, as part of a strategic review of all sponsorship activity.
Personal life
In 1990 Goodwin married Joyce Elizabeth McLean, and they have two children. One of his hobbies is restoring classic cars - the first, a Hillman ImpHillman Imp
The Hillman Imp is a compact, rear-engined saloon car that was manufactured under the Hillman marque by the Rootes Group from 1963 to 1976...
, bought from the proceeds of a summer job; another, a Triumph Stag
Triumph Stag
The Triumph Stag is a British car that was sold between 1970 and 1978 by the Triumph Motor Company, styled by the Italian designer Giovanni Michelotti.-Design and styling:...
he spent years restoring. He is also a keen golfer and Formula One
Formula One
Formula One, also known as Formula 1 or F1 and referred to officially as the FIA Formula One World Championship, is the highest class of single seater auto racing sanctioned by the Fédération Internationale de l'Automobile . The "formula" designation in the name refers to a set of rules with which...
racing fan. Other pastimes include shooting - once a year he would go on shooting trips to Spain with Santander chairman Emilio Botín
Emilio Botin
Emilio Botín-Sanz de Sautuola y García de los Ríos, 1st Marquis of O'Shea, is a Spanish banker. He is the Executive Chairman of Spain's Grupo Santander...
.
In August 2011, Goodwin moved out of his family home after being asked to leave by his wife. The move followed media reports of his extra-marital affair with a colleague at the Royal Bank of Scotland.
See also
- 2008 United Kingdom bank rescue package2008 United Kingdom bank rescue packageA bank rescue package totalling some £500 billion was announced by the British government on 8 October 2008, as a response to the ongoing global financial crisis. After two unsteady weeks at the end of September, the first week of October had seen major falls in the stock market and severe worries...
- Tom McKillopTom McKillopSir Thomas Fulton Wilson McKillop, born 19 March 1943, is a chemist, pharmaceutical company CEO and former chairman of RBS Group.McKillop was born in Dreghorn, a small village near the town of Irvine in Ayrshire, Scotland and educated at Irvine Royal Academy and then Glasgow University, where he...
- UK Financial Investments LimitedUK Financial Investments LimitedUK Financial Investments Ltd is a company set up in November 2008 by the UK Government to manage its shareholding in banks subscribing to its recapitalisation fund. They include Lloyds Banking Group , Royal Bank of Scotland Group and Northern Rock...
- 2011 British privacy injunctions controversy2011 British privacy injunctions controversyThe British privacy injunctions controversy began in early 2011, when London-based tabloid newspapers published stories about anonymous celebrities that were intended to flout what are commonly known in English law as super-injunctions, where the claimant could not be named, and carefully omitting...
External links
- Business Week 7 June 2004, Profile of Fred Goodwin
- The GuardianThe GuardianThe Guardian, formerly known as The Manchester Guardian , is a British national daily newspaper in the Berliner format...
Sir Fred Goodwin section - TimesOnline Payback time for culture of greed - detailed background on the pension controversy
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