Sir Fred Goodwin has lost his knighthood.

Former Royal Bank of Scotland chief executive Sir Fred Goodwin has lost his knighthood.

The government took the rare step of stripping former Royal Bank of Scotland chief Fred Goodwin of his knighthood, following intense criticism of his role in RBS' near-collapse during the 2008 credit crisis, and public anger towards wealthy bankers.

"The failure of RBS played an important role in the financial crisis of 2008-9 which, together with other macroeconomic factors, triggered the worst recession in the UK since the Second World War and imposed significant direct costs on British taxpayers and businesses," the government said in a statement.

"Fred Goodwin was the dominant decision maker at RBS at the time," it added, explaining a decision taken by a committee of civil servants.

Goodwin had been awarded the knighthood in 2004 for services to banking, but has since come under heavy criticism from the public after taxpayer funds were used to bail out the stricken bank.

The government said it would soon be announced that Goodwin's knighthood had been "cancelled and annulled."

The Scottish banker spearheaded RBS' disastrous acquisition of Dutch bank ABN AMRO, which nearly caused the collapse of RBS during the 2008 crisis.

Sir Fred Goodwin has lost his knighthood.

RBS ended up having to be propped up with 45 billion pounds of taxpayers' money, with the government finishing up with an 83 percent stake in the bank.

It is very rare for Britain to remove people of their knighthoods, and Goodwin joins the ranks of figures such as former Romanian dictator Nicolae Ceausescu who forfeited an honorary knighthood.

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 at the fact that bankers are continuing to get paid millions while elsewhere thousands lose their jobs as the economy weakens.

On Sunday, the current chief executive of RBS - Stephen Hester - was forced to decline a million pound share bonus after the award had been attacked by all major British political parties.

©Reuters 2012

'No block' on other RBS bonuses.

'No block' on other RBS bonuses.

The Government has said it will not demand that other executives at the Royal Bank of Scotland follow the example of chief executive Stephen Hester and give up six-figure bonus packages.

Downing Street said ministers will not attempt to "micro-manage" the largely state-owned bank. It is for the board to set bonuses and for individuals to decide whether to accept them, said a spokeswoman.

But Labour leader Ed Miliband insisted that Mr Hester's decision to waive an award worth almost £1 million did not draw a line under the issue of City pay.

Labour will use an opposition day debate in the Commons next Tuesday to urge Conservatives and Liberal Democrats to back a £2 billion tax on bankers' bonuses, which they say could fund the creation of 100,000 jobs elsewhere.

A senior party source said: "This debate is about more than Stephen Hester. It is time for the Conservatives and Lib Dems to show they are serious about tackling the bonus culture by supporting our plan to repeat the bank bonus tax.

"The banks, who helped create the financial crisis, must now help return our economy to growth. We need a bonus tax, we need to give employees a say on top pay in every company, and we need to change the rules and culture so that bonuses are a reward for exceptional performance rather than what you get for doing your job."

Labour had initially planned to use next week's debate to force a vote calling for Mr Hester to be stripped of his bonus, and Mr Miliband said it was this threat which persuaded the RBS boss to give up his £963,000 shares package.

Ministers, including Chancellor George Osborne, welcomed Mr Hester's announcement. He said: "This is a sensible and welcome decision that enables Stephen Hester to focus on the very important job he has got to do, namely to get back billions of pounds of taxpayers' money that was put into RBS."

Stephen Hester has waived his 1 million pounds bonus,
but ministers said they will not
force other RBS executives to do the same

Business Secretary Vince Cable said: "This is a welcome announcement and a positive step towards curbing the bonus culture. RBS should now focus on what the bank should be doing, which is lending to good British companies."

Unite union national officer David Fleming said: "This gesture goes some way in acknowledging the hypocrisy of an organisation which has sacked over 21,000 staff, while still attempting to pay bumper bonuses to the bosses."

RBS boss Stephen Hester rejects £1m bonus

Royal Bank of Scotland chief executive Stephen Hester is to waive his £1m bonus, Sky sources say.

It comes just hours after the Labour Party said it would force a House of Commons vote calling for Mr Hester to be stripped of his bonus.

Mr Hester had been facing mounting pressure to follow the bank's chairman, Sir Philip Hampton, and waive his bonus.

Royal Bank of Scotland chief executive Stephen Hester is to waive his £1m bonus

Sky News' City editor Mark Kleinman said: "Stephen Hester has decided, after days of mounting criticism about his million-pound bonus award, to relinquish that bonus.

"He has decided to waive it and he will not accept the 3.6 million shares that he was granted by the board of directors."

"The political pressure on Mr Hester has been growing for several days.

"The Labour Party called for a vote in the Commons on the issue and Mr Hester is said by friends of his to be deeply concerned by the fact that he is becoming a pariah of the banking sector, despite the fact that he was parachuted in to help turn RBS around after it was bailed up by British taxpayers in 2008.

"This is clearly an attempt by him to prevent the escalating row over his bonus, distracting him from the job of running RBS, which is one of the biggest corporate turnarounds in the history of the banking sector."


©SkyNews

Labour 'to force vote on RBS bonus'

Labour will force a Commons vote calling for Royal Bank of Scotland chief executive Stephen Hester to be stripped of his bonus, a party source has said.

Pressure is mounting on RBS chief
executive Stephen Hester to waive his bonus

It will hold an Opposition Day debate the week after next to heap pressure on the Government as the row continues to grow over the payment, which is worth almost £1 million.

Although the vote will not be binding it could prove deeply embarrassing for the coalition, which has faced widespread criticism for its decision not to block the bonus at the taxpayer-funded bank.

A Labour source said: "David Cameron's failure of leadership cannot be allowed to stand. We will force a Commons vote to let MPs show the public's disapproval of Mr Hester's bonus."

© Press Association 2012

RBS chairman waives 1.4 million pound bonus after Hester row

Royal Bank of Scotland's (RBS.L) Chairman Philip Hampton will not pick up a 1.4 million pound stock bonus, the bailed-out bank said, following public anger and political squabbling over a 1 million pound bonus for its chief executive.

Anger over bankers' earnings has shown few signs of abating, with many still set for million pound salaries while elsewhere thousands lose their jobs as the global economy stutters in the face of Europe's debt crisis.

In Britain, the salaries of top staff at RBS and Lloyds (LLOY.L) are particularly controversial because both banks were bailed out to the tune of 66 billion pounds during the credit crisis, with Britain ending up with an 83 percent stake in RBS along with a 40 percent holding in Lloyds.

"Sir Philip Hampton will not receive the 5.17 million shares he was awarded in 2009 when he joined RBS," said a spokesman for the bank.

Sir Philip Hampton will not receive the 5.17 million shares he was awarded in 2009

Based on RBS's closing share price of 27.74 pence Friday, Hampton's share-based award would have been worth 1.4 million pounds. In 2010, Hampton received a basic salary of 750,000 pounds, with no extra performance bonus or benefits.

The decision not to proceed with Hampton's stock award comes after politicians from across the spectrum criticised the company's decision to give its chief executive Stephen Hester a stock bonus worth roughly 1 million pounds.

Earlier this week, RBS halved CEO Hester's stock bonus for 2011 to just under 1 million pounds from 2 million pounds in 2010, but resisted calls to axe the bonus altogether. Hester has a basic salary of 1.2 million pounds.

The decision by Lloyds chief executive Antonio Horta-Osorio to waive his bonus after he spent time off work on sick leave, had put further pressure on Hester to make a similar gesture.

CAMERON SEEKS TO DEFLECT CRITICISM OVER RBS PAY

RBS shares fell sharply over the course of 2011, losing approximately half their value, and the stock remains well below the average price of 49.90 pence at which the British taxpayer acquired its stake in the bank.

Hester has also had to cut more than 30,000 jobs since taking up his post in 2008, as part of a large-scale restructuring to sell off assets and businesses.

Britain's Conservative-led coalition government has also been criticised for not doing more to curb Hester's pay, facing attacks from not only the opposition Labor party but also from its own members.

CAMERON SEEKS TO DEFLECT CRITICISM

Saturday, Prime Minister David Cameron sought to deflect criticism over his handling of the issue, arguing it would be worse for the taxpayer if RBS had to find a new management team.

"Let me get the facts straight, the fact is Stephen Hester was brought in by the last government, a contract signed by the last government, to turn round RBS, a bank that had got itself into a complete mess," Cameron told television reporters.

"The government has made its views known, and that is why his bonus was cut in half compared to last year. But we do have to bear in mind that the alternatives to what is happening now could be even more expensive if you had a whole new team coming into RBS," he added.

Hester joined RBS in October 2008 from property company British Land (BLND.L) as RBS was reeling from its disastrous acquisition of Dutch bank ABN AMRO.

Britain used some 45 billion pounds of taxpayers' money to rescue RBS, leading to the eventual resignation of former head Sir Fred Goodwin, who was replaced by Hester.

Hester, who had previously worked at rival banks Abbey National and Credit Suisse (CSGN.VX), was given a brief to restructure RBS and return it to health, and RBS said he deserved his stock bonus for making the bank "safer."

Britain aims to eventually sell its state holdings in RBS and Lloyds back to the private sector, although volatile financial markets have meant the timing of any disposal is uncertain.

(Reporting by Sudip Kar-Gupta; Editing by Tim Castle and Toby Chopra)
©Reuters 2012

Pressure grows over RBS bonuses

Deputy Prime Minister Nick Clegg has insisted there should be no big, million pound-plus bonus payout for the boss of the mainly state-owned Royal Bank of Scotland.

Mr Clegg dismissed reports that RBS chief executive Stephen Hester was in line for an award of £1.5 million or more as "pure speculation".

"You are asking me about a hypothetical outcome that I don't believe will arise," he told BBC1's The Andrew Marr Show.

Royal Bank of Scotland chief executive Stephen Hester
received a two million pound bonus last year

He said the Government's ability to influence bonus payments at RBS - which is 83%-owned by the taxpayer - was "constrained" as a result of contractual arrangements entered into by the last Labour government.

However he made clear that ministers expected the overall bonus pool at the bank to be "considerably lower" than it was last year.

"We have been very, very clear that in RBS - and for that matter in other banks - the bonus pool has got to be considerably lower than it was last year," he told BBC1's The Andrew Marr Show.

"The Bank of England, the Financial Services Authority, are saying exactly the same thing because any money that is spare should be where possible be used to repair the banks' balance sheets."

Mr Clegg stressed no decisions had been taken yet on the bonuses at RBS. But after David Cameron said last week that Mr Hester's bonus would be "a lot less" than the £2 million award he received last year, Labour leader Ed Miliband said the Prime Minister had to ensure the awards were kept in check.

And Mr Miliband later went further, calling for Mr Hester to be stripped of his bonus altogether. "Taxpayers are still footing the bill for what's happening at the Royal Bank of Scotland," he told BBC Radio 5 Live's Pienaar's Politics.

"If responsibility means anything I don't think he should be getting his bonus. And the Prime Minister, if he's true to his word, would exercise his responsibility to do something about that."

Osborne sees reason for economic optimism

LONDON (Reuters) - Britain can be confident about its economic outlook this year, with inflation falling, interest rates low and plans in place to deal with a record budget deficit, Chancellor George Osborne on Thursday.

The sovereign debt crisis in the neighbouring euro zone remained a serious threat to the economy, but Osborne said in an interview with ITV News he thought the single currency would survive.

Osborne's cautious optimism came as the National Institute of Economic and Social Research, a leading think tank, said growth had slowed to just 0.1 percent in the last three months of 2011.

The Bank of England on Thursday kept interest rates at a record low of 0.5 percent, where they have been for nearly three years.

Britain is teetering on the edge of recession as global growth slows, government spending cuts bite, and all-important consumers struggle with high inflation, tax hikes and slow wage rises.

Osborne said there were "signs" the economy was turning a corner and there were reasons to be optimistic in a year when Britain will host the Olympic Games in London.

The low interest rates on British sovereign debt, a result of international markets' approval of the government's deficit-cutting programme, were a "huge boost" to the economy, he said.

"Borrowing is coming down. The job is being done as we talk. Jobs are being created in the private sector," Osborne said.

"We've been taking the right decisions. ... they've laid the foundations for growth, job growth, confidence in Britain in this important year where we host the Olympics. There are reasons to be optimistic," he added.

Consumer price inflation fell to 4.8 percent in November, and the Bank of England has forecast that weak economic growth will push inflation below its 2 percent target by the end of 2012.

The Chancellor is optimistic.

"One thing you will see this year is a fall in prices, in the rate of inflation," Osborne said.

He called the current period "challenging" but said that with the hoped-for decline in inflation, "there are some things going right as well, overall you can look to the future with a lot of confidence."

Osborne said he thought the euro would survive the sovereign debt crisis in the neighbouring euro zone, a major export market for the UK, but reiterated the effect on Britain.

"There is a lot of commitment to making the euro work. But there is no doubt that Europe needs to do more to help its economies grow and take some of the decisions that actually we've taken here in Britain to deal with our debts," he said.

"Ultimately, this year of course, what happens in the euro zone is important ... if the European continent is facing problems - that has an impact here in Britain," he added.

Osborne said he wanted to see bonuses fall at the nationalised Royal Bank of Scotland, which announced 4,450 job losses on Thursday in a cutback of its investment banking operations.

"I'm going to use my power as the shareholder to do what's necessary, to make sure that bonuses at RBS's investment bank are much lower than they were last year," he said.

High pay for bankers has become a hot political issue after the 2007-8 financial crisis that saw Britain bail out and nationalise leading banks and suffer a steep recession.

Britain owns 83 percent of RBS, Britain's fifth biggest bank after pumping in 46 billion pounds to keep it from going under.


©Reuters 2012