Thursday, February 26, 2009
Goodwin losing Goodwill?
Sir Fred Goodwin's dogged ambition was to oversee the rise of the Royal Bank of Scotland to global prominence. However, what he managed to accomplish was bring down a successful bank to the verge of collapse. Earlier today, RBS reported a staggering loss to the tune of £24bn, a loss unprecedented in U.K's corporate history.
Sir Fred resigned (or rather was eased out of his role) as the CEO of RBS last October when the fallout from the global financial crises saw the government stepping in to bail out the beleaguered bank and take a 70% stake in it.
If the fact that footing the bank's loses did not go down well with the public, the recent revelation that under the terms of his exit, Sir Fred is to receive a compensation of nearly £650,000 a year, for the rest of his life has clearly outraged them. The man in question is aged 50 and the average life expectancy for a male in the U.K is 77. Cold as though this calculation might seem, the fact of the matter is that the taxpayer has to foot an annual bill of £650,000 for at least 27 years. The very fact that someone is being paid so much for his incompetency is simply mind boggling.
Just a thought in passing, perhaps Sir Fred could use his banking skills to securitise the future earnings from the compensation package and sell it in the market. He would certainly get a good price for it, for this one is as good as a 'AAA' since the income stream is virtually guaranteed by the government itself, much safer than the dodgy ones that RBS traded under his tenure and of course much less complicated too.