Brown: "We are cleaning up the banking system"
- 00:01:19
- ITN
Brown: "We are cleaning up the banking system"
Legal action will be taken if a former RBS boss refuses to give up his massive pension, Prime Minister Gordon Brown has said. RBS earlier announced a whopping £24.1 billion pre-tax loss for 2008, yet 50-year-old former chief executive Sir Fred Goodwin - widely seen as the architect of the bank's downfall - is drawing a £650,000-a-year pension. Mr Brown said he is "determined" action should be taken in the case of Sir Fred - who is known as "Fred the Shred" for his ruthless cost-cutting. He and chairman Sir Tom McKillop lost their jobs last year when the taxpayer had to bail out the bank. Speaking at an event in Suffolk, Mr Brown said: "I am determined that we pursue, if necessary by legal action, cases where too much money has been taken out in cases where there is less justification that has been claimed for remuneration." He added: "Failure should not be rewarded. Practices are coming to light which have got to be dealt with. I became aware of this deal only a few days ago and I immediately demanded action on it. "There has been no financial gain. It's been made absolutely clear that I was not properly informed. Where there is an inadvertent breach, you'll apologise for it and that is what I've done." Chancellor Alistair Darling also said the Government had only found out about the deal recently, but current RBS boss Stephen Hester said: "The arrangements for my predecessor's departure were negotiated directly between past directors of this board and the Government and him." Shadow chancellor George Osborne called on the Government to reveal how much it knew about the deal, saying: "There is of course now only one person who can correct this huge error of judgment by the Chancellor, and that is Sir Fred Goodwin himself, who should in all decency renounce his pension." He described the pension as a "totally irresponsible use of taxpayer's money" and said there appeared to be differing accounts on how much the Government knew about it. Earlier, Mr Darling told the Commons that further action to prop up RBS, including taxpayer-backed insurance for £325 billion of "toxic" assets, is vital to prevent the recession being "longer and more painful and putting more jobs at risk". Mr Hester also announced plans to cut £2.5 billion in costs across the business by 2011 as he attempts to restore the ailing group to health. This will "regrettably" involve further job losses, he added. The bank is planning to make a "non-core" division of assets worth around £540 billion which it plans to wind down or dispose of over the next three to five years. Most of the divisions and assets to be sold will be from RBS's investment banking division, and the bank will end or drastically reduce its presence in 36 of the 54 countries in which it operates. Mr Hester said the "primary task" for RBS would be to rebuild its stand-alone strength so the Government could sell down its shareholding in the coming years. But he warned: "To make any forecast is hazardous, beyond the expectation that 2009 will be a very tough year for the world economy."
ITN | February 26, 2009
