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

Greece, creditors on verge of clinching debt deal

Greece and its private creditors said on Saturday they were piecing together the final elements of a debt swap and expected to have a deal ready next week, essential for sealing a new bailout and avoiding an uncontrolled default.

Greece and its private creditors said on Saturday they
were piecing together the final elements of a debt swap and expected to have a deal ready next week

After muddling through round after round of inconclusive talks, the negotiations are in their final phase - though it appeared unlikely that a preliminary deal would be secured in time for a European Union summit on Monday.

Greek bondholders said the two sides were finalising a deal along the lines of a proposal made by Jean-Claude Juncker, the chairman of euro zone finance ministers.

The proposal made by Jean-Claude Juncker,
 the chairman of euro zone finance ministers

The bondholders' comments suggested creditors had accepted Juncker's demand for a coupon, or interest rate, of below 4 percent on new, longer-dated bonds that Athens will swap for existing debt.

The coupon had been the main stumbling block in the talks, with euro zoneministers rejecting private creditors' demand for a coupon of at least 4 percent - above the 3.5 percent level Greece and its European partners had been holding out for.

"Next week we will be in a position to complete the debt swap," Finance Minister Evangelos Venizelos said, citing significant progress at Saturday's talks. "We are really one step away from the final deal."

He confirmed that the two sides were working along the "exact framework" provided by euro zone finance ministers.

Charles Dallara, chief of the Institute of International Finance that negotiates on behalf of banks and insurers, is due to leave Athens on Sunday but will remain in contact with Greek authorities, the IIF said.

Still, for Athens, progress on the debt swap is at risk of being overshadowed by increasingly problematic talks with its foreign lenders, whose inspectors are in town demanding unpopular reforms that no politician wants to be linked to.

DENSE, DIFFICULT AND CRUCIAL

Crushed by 350 billion euros of debt and running out of cash quickly, Greece is scrambling to appease the "troika" of its official lenders - the European Commission, European Central Bank and International Monetary Fund - and stitch up a deal with private creditors simultaneously.

Unimpressed with Athens dragging its feet on reforms, the troika has said they could hold up aid if more is not done to make the Greek economy more efficient.

"It's all very dense, difficult and crucial," a Greek finance ministry official said.

The IIF are one of Greece's lenders

European paymaster Germany is pushing for Athens to relinquish control over its budget policy to European institutions as part of discussions over a second rescue package, a European source told Reuters.

With many Greeks blaming Germans for the austerity medicine their country has been forced to swallow, officials in Athens dismissed the idea as out of the question. "The government stresses that this responsibility belongs exclusively to the Greek government," said government spokesman Pantelis Kapsis.

"The government has made a series of steps to improve the effectiveness of the public administration and a closer monitoring of the efforts to achieve fiscal targets.".

The European Commission, the executive arm of the 27-country bloc, said it wanted the Greek government to maintain autonomy.

"The Commission is committed to further reinforcing its monitoring capacity and is currently developing its capacity on the ground," a spokesman said. "But executive tasks must remain the full responsibility of the Greek Government, which is accountable before its citizens and its institutions. That responsibility lies on their shoulders and it must remain so."

A government source in Berlin said Germany's proposal was aimed not just at Greece but also at other struggling euro zone members which receive aid and are unable to make good on their obligations. "All options can obviously be introduced only with the agreement of, for example, the Greeks themselves," he added.

NEW BONDS FOR OLD

The debt swap, in which private creditors take a 50 percent cut in the nominal value of their Greek holdings in exchange for cash and new bonds, is also a prerequisite for the country to secure a 130-billion-euro rescue plan drawn up last year.

The two sides have broadly agreed that new bonds under the swap would have a 30-year maturity, but the talks ran into trouble over the coupon and whether the ECB and other public creditors must take losses on their holdings.

A deal, aimed at chopping 100 billion euros off Greece's debt load, must be sealed in about three weeks at the latest as Greece has to repay 14.5 billion euros of debt on March 20.

Otherwise Greece could sink into an uncontrolled default that might spread turmoil across the euro zone and tip the global economy back into recession.

"There is progress"- IMF Managing Director, Christine Lagarde

IMF Managing Director Christine Lagarde said on Saturday that euro zone members were making progress to overcome their crisis but must do more to strengthen their financial firewall to stop the crisis spreading, adding the IMF was ready to help.

"There is progress as we see it," Lagarde told a panel discussion at the World Economic Forum inDavos.

"But it is critical that the euro zone members actually develop a clear, simple, firewall that can operate both to limit the contagion and to provide this sort of act of trust in the euro zone so that the financing needs of that zone can actually be met."

Concern has also grown in recent days that the debt swap may not do enough to get the country's debt reduction plan back on track, and that Greece's European partners will be forced to stump up funds to cover the shortfall.

The German news magazine Der Spiegel reported on Saturday that Greece's international lenders thought Athens would need 145 billion euros of public money from the euro zone for its second bailout, rather than the planned 130 billion euros.

The magazine said the extra money was needed because of the deteriorating economic situation in Greece, echoing a Reuters report on Thursday.

Greece is in its fifth year of recession, and hopes of an end to the crisis in the near term have virtually gone, because of the combination of squabbling politicians, rising social anger and its inability to push through badly needed reforms.


©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."

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