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Former RBS boss stripped of knighthood

Feb 01 2012 11:08 Reuters

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London - Britain has stripped former head of Royal Bank of Scotland Fred Goodwin of his knighthood on Tuesday, putting a banker reviled by tabloids as "Fred the Shred" alongside Zimbabwe's Robert Mugabe and Romania's Nicolae Ceausescu as those who lost the high honour.

Fred Goodwin, elevated to the rank of knight of the realm by Queen Elizabeth in 2004, steered one of Britain's largest banks to near collapse with the catastrophic buyout of a Dutch bank, a disaster that helped bring on the global financial crisis.

He has become a target of public fury in Britain for his role in the 2008 crash - which led to the government spending £45bn to bail out his bank - and the lavish taxpayer-funded pension he took with him when he left.

"RBS came to symbolise everything that went wrong with the British economy over the last decade and under Fred Goodwin that's when it happened and I think it's appropriate therefore that he loses his knighthood," Britain's Conservative Finance Minister George Osborne said.

The decision to strip Goodwin of his knighthood came two days after Goodwin's successor at RBS, Stephen Hester, announced he would turn down a million pound share bonus that had drawn withering scorn from all of Britain's major political parties.

A report in December by the Financial Services Authority (FSA) regulator into the near-collapse of RBS blamed Goodwin and other former RBS bosses, while also criticising the FSA itself and the then-Labour government for lightweight financial regulation.

Conservative Prime Minister David Cameron expressed satisfaction at the decision to strip Goodwin of the knighthood, while opposition Labour Party leader Ed Miliband - who had demanded a parliamentary debate on Hester's bonus - continued to call for deeper reforms at banks.

"It is right Fred Goodwin has lost his knighthood but it is only the start of the change we need to see. We need to change the bonus culture and we need to change the rules so we see real responsibility across the board," he said.

Knighthoods for subjects of the British queen - and honorary ones for foreigners - are among the highest honours bestowed by Britain for outstanding achievement or service. As a knight, Goodwin had the right to be called "Sir Fred".

He joins a small list of those who have been stripped of the honour, alongside figures such as the Zimbabwean president, the former Romanian Communist dictator and Anthony Blunt, a notorious British double agent who spied for the Soviets.

"Fred shredded"

Goodwin oversaw about 20 deals while in charge of RBS, as the Scottish bank embarked upon an expansive acquisition spree. His habit of extracting savings from deals by axing staff earned him the nickname "Fred the Shred".

After the announcement, newspaper headline writers had a field day. "Sir Fred's Honour Shredded" ran the banner headline of Wednesday's edition of the Financial Times, while the popular Sun tabloid's take was: "Fred's 'Sir' is Shredded".

The electrician's son was born and raised in Paisley, near Glasgow, where he attended the local grammar school before studying law at Glasgow University. He qualified as an accountant and made his mark in banking by helping clean up the mess of collapsed BCCI bank in the early 1990s.

He rose swiftly through the ranks after joining RBS, but his pursuit of Dutch bank ABN AMRO proved a deal too far. The credit crisis saw the value of the ABN AMRO assets fall rapidly and RBS found itself close to collapse.

To prevent a wider economic collapse, the state bailed out the nearly 300-year-old bank, buying an 83% stake.

Goodwin added to the scorn of many Britons when he fought to hold on to a pension pot worth almost 700 000 pounds a year from the now mainly publicly-owned bank. A public outcry forced him to settle for about half as much.

The abrogation of his title was a very British punishment in a country whose public honours system still reflects centuries of class distinction and tradition.

The Unite trade union welcomed the move to strip Goodwin of his title.

"It is a token gesture to strip Fred Goodwin of his knighthood, but one which will be well received by the thousands of workers who lost their jobs during his rule," said the union's national officer David Fleming.

The woes of RBS have come to symbolise for many in Britain more serious problems with the country's banking industry. Many are still angry that bankers continue to earn millions while elsewhere thousands lose their jobs as the economy weakens.

Conservative Party politician Mark Field said British authorities should look at clawing back Goodwin's pension.

"I have always felt the far more serious thing rather than the area that everyone has been jumping on the bandwagon about - his knighthood - has been the fact that he got a pension," he told the BBC.

"That was signed off at a time when we knew that most of the so-called profits RBS had achieved over the years of Fred Goodwin's stewardship were in fact entirely illusory." 

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