Anger mounts at banker's pension; ACTION DEMANDED TO RECOUP CASH

Evening Chronicle (Newcastle, England), Feb 27, 2009

PRESSURE is mounting on the Government to take action over the pounds 693,000-a-year pension of ousted Royal Bank of Scotland boss Sir Fred Goodwin.

Treasury minister Lord Myners last night wrote to Sir Fred, urging him to think again about his "unfortunate and unacceptable" decision to reject ministers' pleas to give up some of his retirement pay voluntarily.

Prime Minister Gordon Brown yesterday indicated the Government was ready to take legal action to ensure there was no "reward for failure" in banks like RBS, which filed UK record losses of pounds 24 billion, largely due to the disastrous strategy of corporate acquisitions pursued by its former chief executive.

With a second multi-billion pound bail-out potentially bringing the taxpayer's stake in RBS up to 95%, there was growing anger at Westminster over the generosity of the early retirement package offered to Sir Fred.

Shadow chancellor George Osborne denounced the package as "obscene (and) unacceptable" and pointed the finger of blame at ministers.

"Either they did know and failed to act, or didn't know and failed to ask the right questions," he told MPs.

And Liberal Democrat Treasury spokesman Vince Cable described Sir Fred's pension package as "a massive public spending increase, public wages, for which there is no justification whatever".

Questions were being asked over when ministers knew about the generous package.

Chancellor Alistair Darling told MPs that, while the Government was aware of the size of the payout last year, it had initially understood that this was a legally unavoidable contractual obligation.

It was only around a week ago that ministers learnt that the board of RBS had used their discretion effectively to double the size of Sir Fred's pension pot from pounds 8 million to pounds 16 million, he said.

In a letter to Lord Myners, Sir Fred insisted that changes to his pension - which he is already enjoying at the age of 50 thanks to the terms of his early retirement deal - were "not warranted".

Sir Fred said that he had given up his right to a year's salary in lieu of notice, as well as share-related benefits, when he agreed to leave RBS as the Government stepped in to rescue the beleaguered bank.

He wrote: "To voluntarily accept a reduction in a pension entitlement which has been built up over many years and in other employments in addition to RBS is not warranted."

But Lord Myners responded within hours that his refusal to volunteer a reduction in his pension was "unfortunate and unacceptable".

"Such an act would be an appropriate recognition of the failings of RBS under your tenure and the subsequent support the Government has provided," he said.

"I do not agree with your rationale for declining my request that you voluntarily reduce your pension.

"And indeed I hope that, on reflection, you will now share my clear view that the losses reported today by the bank which you ran until October cannot justify such a huge award."

UK Financial Investments - the body which manages taxpayers' shareholdings in the part-nationalised banks - has been asked by the Treasury to look into the possibility of clawing back some of the pension deal.

CAPTION(S):

UNDER PRESSURE: Sir Fred Goodwin