British banking giant RBS has revealed it expects to make more job cuts and that former chief executive Fred Goodwin is considering taking a voluntary cut in his pension.
New chairman Philip Hampton Friday made a strong apology for the bank’s mistakes, which lead to a UK record loss of £24.1 billion ($34.6 billion) for 2008. In not so veiled comments he also laid the blame for the bank’s current situation firmly at the feet of Goodwin, who retired after the government’s multi-billion pound bailout last year. The size of Goodwin’s pension — estimated at £650,000 ($933,000) a year for life — has provoked outrage but Hampton indicated that RBS’s former boss was now considering taking a voluntary reduction. In a statement released ahead of the group’s AGM Friday, Hampton said the “past was done” and could not be changed. “Only a tiny minority of staff in RBS were in any way responsible for the major credit market losses we suffered in 2008. It is remarkable that there were only a few hundred people responsible in the relevant segments of our businesses chiefly in the financial centers of London, Amsterdam and New York, most of whom have now left the group. “I don’t think there can be any doubt that the key decision that led RBS to its difficulties was the acquisition of ABN AMRO (Goodwin led the nearly $90 billion purchase). That is the painful reality that we can now do nothing to change.” Hampton said the bank had been embarrassed by a series of stories but it was now time to move on. Watch consternation at Goodwin’s £16 million pension fund »
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“I believe we should bring an end to the public flogging and focus on the good and enduring people and businesses of RBS and allow them to earn our way back to success. “We have suffered a major financial hit and continued collateral damage from public criticism will compound the problem not resolve it.” He said the bank had many difficult decisions to make. “Chief among these will be the need to achieve the annual cost reduction targets of £2.5 billion ($3.67 billion) that we have set within the next three years. “All costs will be scrutinized from our back offices to our highest offices. Clearly this will mean that some of our people will lose their jobs. “In the UK this year so far we have announced around 2,700 posts will go. We can only be honest and say that this will not be the end of the story and more are expected in the UK and internationally in the period ahead.” Hampton said reforms had already been made to the company’s remuneration policies and more would follow this year. “Reward will be longer term and more directly aligned to shareholder interest rather than short-term return. In addition our new chief executive (Stephen Hester) has, at his own insistence, a clause in his contract ensuring that he will receive no reward if he leaves the company for reasons of his own failure.”
Hampton said the company would obviously not be paying a dividend this year but wanted to do so again as soon as possible. “The operating environment is as tough as any of us have ever known and we are asking our staff to knuckle down for a three to five year project. We can only ask you, our shareholders, for the same perseverance.”