Comfortable retirement: Fred Goodwin
Fred Goodwin, the former boss of Royal Bank of Scotland who brought the lender to the brink of collapse during the financial crisis, is understood to be enjoying a pension of more than £500,000 a year, The Mail on Sunday can reveal.
The sheer scale of his windfall will shock millions of NatWest customers struggling with the cost of living squeeze, as well as thousands of small business owners whose livelihoods were ruined when the bank pulled the plug on them.
It will also outrage taxpayers who are still on the hook for billions of pounds.
The revelation comes as NatWest is embroiled in fresh controversy over former chief executive Alison Rose, who resigned after confirming the bank account details of former Ukip leader Nigel Farage to a BBC journalist. Rose is reportedly seeking a payoff of up to £11million.
Ministers had hoped to be rid of NatWest by now, but plans to return the bank to full private ownership have been shelved until 2026 and could be delayed even further, according to sources.
Goodwin was forced to quit and later stripped of his knighthood after RBS – since re-named NatWest – had to be rescued by the taxpayer in 2008 in a £46 billion bailout.
But the banker – dubbed ‘Fred The Shred’ for his aggressive management style – left with the bulk of his gold-plated pension intact.
At the time his pension was worth £342,500 a year, but because it is linked to inflation its value has soared.
Analysis by wealth manager Quilter found that Goodwin’s pension is now worth around £545,000, according to the bank’s pension scheme rules.
If Goodwin, 65, wanted to buy that level of annual retirement income today he would need £14 million, Quilter added. It is unclear if Goodwin agreed a separate pension uplift deal when he left in 2009. His pension bonanza was last night slammed as ‘egregious’ and a ‘reward for failure’ by Ian Fraser, author of Shredded: Inside RBS, The Bank That Broke Britain.
The taxpayer retains a 38.5 per cent stake in NatWest. The losses to the public purse are immense.
The bank’s shares are still languishing way below the rescue price of about £5.00 paid by the Treasury 15 years ago. They have fallen further in recent days to around £1.80 after the lender issued a warning on profits. The share price drop means taxpayers are sitting on even bigger losses on their remaining stake.
The Office for Budget Responsibility, the independent watchdog which assesses the public finances, reckons the NatWest rescue – and the much smaller bailouts of Northern Rock and Bradford & Bingley – have cost the taxpayer £33 billion. But that estimate was based on NatWest’s much higher share price earlier this year, so the final figure is likely to be far higher.
Goodwin presided over the disastrous expansion of RBS in the run-up to the 2008 financial crisis that at one stage saw the bank’s balance sheet swell to a staggering £2.2 trillion – more than the size of the entire UK economy.
His pension would have been even higher, but he was forced to bow to public anger and forfeit a top-up worth more than £200,000 a year. At the time Goodwin said he was entitled to take his enhanced pension early under an agreement with the previous board.
NatWest declined to comment on Goodwin’s pension arrangements.
Goodwin could not be contacted for comment last night.