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

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

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."

Sick-leave bank chief refuses bonus

The boss of taxpayer-backed Lloyds Banking Group has said that he would not take his annual bonus for 2011 to reflect the "impact" his leave of absence had had on the bank.

Antonio Horta-Osorio, who returned to work earlier this week after taking two months off due to severe sleeping problems, said he acknowledged that his absence had had an impact both "inside and outside the bank, including for shareholders".

Lloyds Banking Group boss Antonio Horta-Osorio has said he will not take his annual bonus

Lloyds, which is 40.2% state-owned, saw its shares slump when Mr Horta-Osorio stepped down, amid fears that his leave could become permanent and derail progress made on reviving the bank.

The 47-year-old Portuguese-born banker, whose pay and bonus entitlement will be revealed in the group's annual report next month, added that his bonus should reflect the performance of the bank but also the "tough financial circumstances that many people are facing".

The announcement follows a pledge from Prime Minister David Cameron to crack down on City pay, which would include introducing a binding vote for shareholders on executives' salaries.

©Press Association 2012

SIR RICHARD VOWS TO IMPROVE BANKING

Sir Richard Branson has vowed to improve British banking for customers during his visit to the first newly re-branded branch of Virgin Money.

The tycoon's firm took over nationalised Northern Rock in a £747m deal and he toasted staff and customers in the lender's Newcastle heartland.

Sir Richard was visiting one of Northern Rock's landmark branches in the city's Northumberland Street.

Sir Richard wants to improve banking

The re-branding of Northern Rock's 75 branches across the country is expected to take nine months.

Sir Richard said: "The Virgin Group has always gone into markets where there's been an opportunity to make things better for customers.

"We've been doing it for 40 years, with some real milestone moments along the way, from our first steps in the record industry to launching Virgin Atlantic.

"Now we want to do the same for banking.

"It's not something we take lightly. There's a lot of hard work ahead. But we have the people, the products and the plans in place".

Jayne-Anne Gadhia, chief executive officer at Virgin Money said: "I am delighted to mark the acquisition of Northern Rock and the beginning of our quest to make banking better with all the fantastic people we have working for the combined business."

Sir Richard will spend two days meeting staff starting with a tour of branches in the North East as well as meeting staff in the operational headquarters in Newcastle before moving on to the Virgin Money offices in Edinburgh, Norwich and London.

Virgin Money aims to challenge the banking industry's "big five" and has claimed its range of saving deals will be "simple, fair and transparent".

The brand's local reputation was enhanced on Wednesday when Newcastle United beat Manchester United 3-0 in front of a packed home crowd while wearing the new Virgin Money logo on their black and white shirts for the first time.

After the landmark result, Sir Richard tweeted: "OK, I accept we're jammy bastards!" Newcastle United also won on Saturday with the new logo.

Northern Rock was nationalised and split into "good" and "bad" banks after the disastrous 2007 credit crisis which saw queues of savers line up to withdraw their cash.

PA 2012

CAMERON: 2012 A DIFFICULT YEAR

David Cameron warned today of another "testing year" ahead for British households.

The Prime Minister said he hoped inflation would fall this year to ease the pressure and insisted there were positive signs on private sector employment and exports.

But he said he would not "pull the wool over people's eyes" about the difficulties that remained.

"Looking into 2012, one of the trends I hope to see happen is a fall in the level of inflation, so households feel under less pressure than they did in 2011," he told BBC Radio 4's Today programme.

"But undoubtedly - I don't want to pull the wool over people's eyes - it's a difficult year, it's a testing year, but I think we need to meet these challenges with the sense that we can overcome them."

Mr Cameron acknowledged that the Government's attempts to rebalance the economy away from its reliance on public sector spending and financial services was not going as quickly as he had hoped.

"What we need to have in Britain is a rebalancing of the economy, away from Government spending, excessive borrowing, financial services and consumption and towards business investment, export, manufacturing, making things again, right across the country," he said.

"There is a rebalancing taking place, but it's not going as fast as we'd like it to, we need to do better on that front."

He said private sector employment was growing, exports were improving and there was "some reindustrialisation going on".

"There are some positive signs but my general point is that we want the rebalancing to go further and faster and that's what the Government should help focus on," Mr Cameron said.

PM "not satisfied" with bankers' bonuses

Mr Cameron said he was "not satisfied" with the level of bankers' bonuses, saying they were "completely out of whack".

He indicated that further measures to curb bonuses in the City would be unveiled within days.

"People aren't satisfied, I'm not satisfied. We've seen a level of reward at the top that has just not been commensurate with success."

He said the Government would be introducing greater transparency about remuneration and increasing shareholders' power to restrict pay.

"I think those things can make a difference and I will have more to say about that later this week," he said.

"I think the whole bonus culture has got completely out of whack."

But he said there had already been "a massive reduction" in bonus levels compared with three or four years ago.

PA 2012