Pressure on RBS to ditch Goodwin and McKillop
Sir Fred Goodwin, chief executive of royal Bank of Scotland, and his chairman Sir Tom McKillop were once again under pressure to quit after today's £500bn banks bailout.
Sir Fred Goodwin: Not forced to leave
But RBS denied categorically the two men were going, and dismissed reports that Goodwin will be replaced by Stephen Hester, the former investment banker who was on the boards of Abbey and Northern Rock and is now chief executive of British Land.
It similarly denied that McKillop will hand over to Sir Philip hampton, chairman of Sainsbury's and former finance director of Lloyds TSB, BT and British Gas.
Goodwin was last year paid just over £4m, including £2.86m in bonuses. A pay-off would be hefty. He and McKillop came under huge pressure earlier this year after the bank had to raise £12bn from shareholders through a rights issue at 200p a share. RBS shares yesterday plunged 39% to 90p - 55% below the rights-issue price. They hit 597p at their peak.
Goodwin was seen to have massively overpaid when he led the consortium that bid ¤70bn (£54bn) for Dutch bank ABN Amro only months before the credit crunch blew up last year. He survived this spring's annual meeting, though many leading investors thought then his days were numbered. Treasury sources today denied he had been forced to offer his resignation as part of the banks rescue package.
An RBS spokeswoman said: 'The board has been completely focused on fixing things, and these issues have not even been discussed.'
Goodwin earned his nickname Fred the Shred for the ruthless way he cut costs and axed 18,000 jobs after RBS took over larger rival NatWest eight years ago. It also owns insurer Direct Line and private banks Coutts, Drummonds, Child and Adam.
Credit rating agency Standard & Poor's cut rBS's main debt rating by one point on Monday, helping to aggravate yesterday's share-price collapse. Goodwin told shareholders in December 2006: 'We don't need to make any big acquisitions now, and the real message in the trading update is that we are generating results ahead of expectations on a purely organic basis, and that feels like a pretty good place to be.' he launched the ABN bid four months later, just before it became apparent a credit crunch was on the way.
Sir Fred's decision to keep going may have led to the collapse of his reputation as a stellar banker. That reputation was formed when he trumped arch-rival Bank of Scotland to acquire NatWest in 2000. The deal was then the most remarkable the banking industry had seen, with a stalwart of the UK high Street falling into Scottish arms.
Scottish First Minister Alex Salmond today said the speculation surrounding the future of Sir Fred was 'not helpful' while the stabilisation package was being announced.
'The fact that it [RBS] came under such pressure yesterday is an indication of the very peculiar, unusual circumstances of leaks and rumours that were circulating around yesterday,î he said. 'I'm sure everybody who was in that process would have much preferred that hadn't happened when they look back.'
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