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

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."