Fred Goodwin

Frederick Anderson Goodwin FRSE FCIBS (born 17 August 1958)[2] is a Scottish chartered accountant[3] and former banker who was chief executive officer (CEO) of the Royal Bank of Scotland Group (RBS) between 2001 and 2009.

At 32, Goodwin was in charge of 1,000 people with teams from London to Abu Dhabi and the Cayman Islands that eventually returned over half the money from one of the most complicated, high-profile financial frauds ever.

[14] Around this time he gained the moniker "Fred the Shred" from City financiers, reflecting a reputation for ruthlessly generating cost savings and efficiencies whilst at Clydesdale.

[18] From the time that Goodwin took over as chief executive until 2007, RBS's assets quadrupled, its cost-to-income ratio improved markedly, and its profits soared.

[23] Following the Bank of China deal, he was forced to promise RBS shareholders he would not indulge in any further big acquisitions and focus instead on growing the group organically.

[25] The deal was struck in October 2007 as the global liquidity crisis began to develop, with Barclays withdrawing its EUR61bn bid and ABN's shareholders endorsing the EUR71bn RBS takeover.

[5] Goodwin's strategy of aggressive expansion primarily through acquisition, including the takeover of ABN Amro, eventually proved disastrous and led to the near-collapse of RBS in the October 2008 liquidity crisis.

The combination of this, along with the weak equity capital position, and the massive exposure to losses on CDOs via Greenwich, were the factors that destroyed RBS.

[28] The bank experienced severe financial problems, and attempted to shore up its balance sheet with a £12 billion share issue in April 2008, one of the largest in UK corporate history.

[5] The attempt to raise an additional £7 billion capital by selling off insurers Churchill and Direct Line failed due to lack of interest in the context of the global liquidity crisis.

Despite these developments, the Daily Telegraph insisted that "his grasp of finance is in the Alpha class" and that he was "unlikely to be in the growing queue of jobless bankers" for long.

[35] In 2008/9, the RBS group was effectively nationalised: the UK Government owns nearly 70% of the ordinary shares of the company owing to its enormous debts.

[17] During Goodwin's tenure as CEO he attracted criticism for lavish spending, including expenditure on the construction of a £350 million headquarters at Gogarburn outside Edinburgh, opened by Queen Elizabeth II in 2005[36] (described by one commentator as "comically expensive"[37]), and a $500m headquarters in the US begun in 2006,[38] as well as the use of a Dassault Falcon 900 jet owned by RBS leasing subsidiary Lombard for occasional corporate travel.

His "penthouse-style office on the top level was a staggering 20 metres long", being "so large that it has since been split in two [after Goodwin's departure) and still comfortably accommodates the bank’s current chairman Sir Howard Davies, CEO Ross McEwan and their staff".

[42] Nick Cohen described Goodwin in The Observer as "the characteristic villain of our day", who made £20m from RBS and left the taxpayer "with an unlimited liability for the cost of cleaning up the mess".

"[45] A Labour MP from Scotland, Jim Sheridan, repeated the suggestion, and added that the police should investigate the activities of senior bankers.

[46] In September 2011, Alistair Darling, the Chancellor of the Exchequer at the time of the RBS collapse, noted in leaked excerpts from his upcoming book, Back From The Brink: 1,000 Days at No 11, that Goodwin behaved "as if he was off to play a game of golf" while officials struggled to prevent a meltdown.

"[56] Liberal Democrats Treasury spokesman Vince Cable said that "What the government could do is say that if the company had gone bust, which it would have had it not been a bank, he would have been entitled to a compassionate payout of £27,000 a year, and if he does not like that he could sue.

RBS could have terminated Mr Goodwin's contract as CEO with 12 months' notice, so avoiding the more expensive pension award.

Kingman told the committee that UKFI was investigating whether RBS had "full knowledge of the alternatives" when it granted Mr Goodwin his pension.

[63] On 10 March 2011, John Hemming, a backbench Liberal Democrat MP, referred in Parliament (under parliamentary privilege) to the supposed existence of "a superinjunction preventing [Goodwin] from being identified as a banker".

"[68] Later that day, the High Court varied the order, allowing Goodwin's name to be published, but continued it in relation to the identity of the lady involved.

[69] In his judgment, Mr Justice Tugendhat noted that the order had not been a superinjunction as it had been published in anonymised form on the British and Irish Legal Information Institute website.

[79][80] A Cabinet Office spokesman said:[81] The scale and severity of the impact of his actions as CEO of RBS made this an exceptional case.

They are clear that 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.

In reaching this decision, it was recognised that widespread concern about Fred Goodwin's decisions meant that the retention of a knighthood for 'services to banking' could not be sustained.The annulment proved controversial amongst political and business figures, who pointed out the three-and-a-half-year gap since the near-collapse of RBS, and the coincidence of the referral taking place during a political argument over bonus payments to the current head of the bank.

Alistair Darling described the annulment as having appeared to have been taken "on a whim", whilst the Institute of Directors warned against creating "anti-business hysteria".