Lifestyle that means never having to say you’re sorry...
While RBS recruits graduates on £2,700 a year, former boss Fred the Shred is currently managing on £342,500
AFTER spending the best part of a decade on state-sponsored life-support, Royal Bank of Scotland is starting to show some signs of life. A loss-making basket case for much of the past nine years, the bank looks set to return to making consistent profits.
The Government is salivating at the possibility of re-privatising its 71 per cent stake, even though that would almost certainly be at a £20 billion-plus loss to the taxpayer.
But the ways in which this return to profitability is being achieved are not without controversy.
Indeed, some would argue some of them have been downright immoral, in addition to being a betrayal of the taxpayers who rescued RBS from oblivion with a £45.5 billion package in 2008, the Britishbased staff who have worked hard to ensure the bank has a viable future, and the customers seeing branches shut.
Barely a month passes without the announcement of a fresh batch of branch closures. RBS insists these are justified because more and more customers are doing their banking online, even though plenty of people still depend on their branches.
By the time the current round of closures is complete, the bank will have only 854 branches left in the UK, with 89 in Scotland.
So, two-thirds of the 2,350 branches that former chief executive Fred Goodwin inherited when he took the reins in 2000 will, by the end of the summer, have become wine bars or been boarded up.
The shrinkage of the wider RBS global workforce has been even more stark – total staff numbers have plummeted from 200,000 in October 2008 to less than 71,000 today.
DWINDLING staff numbers in its home country have been matched by rapid growth in India, with a lot of work going to RBS’s fast-growing ‘global hubs’ in the Indian cities of Mumbai, Delhi, Chennai, Gurgaon and Bangalore, where it has more than 12,000 staff.
In its sprawling Chennai hub, as this newspaper reveals today, the state-rescued lender is paying Indian graduates £2,700 a year – one-tenth of the bank’s average pay in the UK – to fill analyst roles.
The bank has also come under fire for its failure to accept responsibility for the behaviour of its global restructuring group, which is accused of deliberately wrecking viable business customers in order to profit at their expense.
Its activities were described by MP Clive Lewis as ‘the largest theft anywhere, ever’.
RBS has also faced severe criticism for its cack-handed approach to spinning off 314 Williams & Glyn branches in England to create a new, standalone competitor bank.
That project turned out to be a disaster, even after RBS poured £2.2 billion into it, and most of the branches are now being mothballed. Among all this pain, it’s worth asking how Fred Goodwin, the architect of the bank’s 2008 collapse and therefore largely responsible for its travails, is getting on.
He has suffered one or two minor indignities since being ousted by the Government.
In February 2009 he was forced to appear before the Treasury Committee, where he insisted it was ‘too simple to blame it all on me’.
Following intense pressure, he felt compelled to hand back some of his pension in June 2009 – meaning his annual pension fell to £342,500 a year.
He was stripped of his knighthood in January 2012. Only a select band of despots, traitors and brigands – including Robert Mugabe, Nicolae Ceaucescu and Anthony Blunt – had suffered such an indignity before. Goodwin was also, reportedly, turfed out of the family home by his wife Joyce after she discovered he was having an affair with a human resources manager at the bank, a liaison he tried and failed to cover up with a superinjunction in the English High Court.
That said, a lot else has also gone Goodwin’s way. He was cleared of misconduct by the Financial Services Authority in December 2011. A five-year probe by the Crown Office found ‘insufficient evidence’ of criminal behaviour to bring charges against RBS or any of its former directors.
He remains a member of Institute of Chartered Accountants of Scotland and a fellow of the Chartered Banker Institute, and last summer escaped the humiliation of a High Court appearance after RBS settled with shareholders. Arguably, the bank spent some £1 billion to ensure the case was not heard and former directors did not have to appear in court.
Goodwin, who is not believed to have worked since quitting a job with the architecture firm RMJM in 2011, is leading the life of Riley compared to the RBS staff who are losing their jobs, Indian workers on derisory pay and business people RBS stripped of their firms.
HE dabbles in the restoration of classic cars, pootling along in a convertible Triumph Stag from his Edinburgh home to play 18 holes at his favoured golf course at Archerfield in East Lothian. He regularly shoots pheasant with a coterie of friends believed to include double glazing tycoon Gerard Eadie, former investment banker Matthew Greenburgh, former stockbroker Jamie Matheson and construction boss Sir Fraser Morrison.
He still consorts with old friends such as Sir Jackie Stewart, entertains amid the Rococo splendour of Edinburgh’s fivestar Prestonfield House Hotel and occasionally shows up at a quasi-Masonic Edinburgh institution called the Oyster Club to quaff Guinness, champagne and oysters with members of Edinburgh’s ‘great and good’.
What is most galling, however, is that Goodwin still doesn’t really believe he has done anything wrong.
Sources say he believes that if only the former prime minister, Gordon Brown – who in his latest memoir My Life, Our Times said Goodwin showed ‘no contrition’ as he ‘walked away with all his past bonuses untouched’ – and former chancellor Alistair Darling had allowed him to stay on at the bank in 2008, he would have done a better job at getting it back on the straight and narrow than those who followed him. That is serious hubris for you.
Ian Fraser is the author of Shredded: Inside RBS, the Bank That Broke Britain.
Quaffs champagne with the great and the good