Taxpayers set for £10bn loss on NatWest as disgraced ex-boss takes £600k-a-year pension

Fred “the Shred” Goodwin, the disgraced ex-boss of Royal Bank of Scotland, is estimated to be receiving an annual pension value just about £600,000, as the federal government prepares to claim a £10bn loss after promoting its ultimate stake within the financial institution as early as this week.

The banking workforce, now referred to as NatWest, is predicted to go back to complete personal possession inside of days, drawing a line beneath a £45bn state bailout that stored the financial institution from the edge of cave in on the top of the 2008 economic disaster.

The 17-year effort to off-load the federal government’s 84% stake within the lender has come at a considerable charge to the general public handbag, with the federal government anticipated to fall in need of recouping its economic reinforce.

Shares have handiest not too long ago driven previous their pre-financial disaster ranges – final at 524p on Friday – however the bulk of the federal government’s stocks were underneath the 502p at which they have been purchased. It way the federal government may just finally end up improving kind of £35bn of the unique £45bn spent at the rescue bundle in 2008, marking a near-£10bn loss.

Meanwhile, once a year payouts have soared for Goodwin, the boss blamed for serving to push the financial institution to its near-collapse.

The former RBS leader govt, who used to be sacked as a part of a non-negotiable situation of the state rescue, in the beginning walked away with a £16m pension pot that paid out about £700,000 a 12 months. But public outrage pressured Goodwin and the financial institution to halve the ones payouts to £342,500 a 12 months.

However, after just about twenty years, an settlement that connected his payouts to the velocity of inflation has driven that determine ever-closer to the unique sum. The financial institution is now spending about £598,000 a 12 months on Goodwin’s pension just about 17 years after the bailout, in step with estimates by means of wealth supervisor Quilter shared with the Guardian.

NatWest Group declined to remark. The Guardian used to be now not ready to achieve Goodwin for remark.

Goodwin’s over the top spending on a string of acquisitions, personal jets, and a sprawling £350m campus in Edinburgh, have been criticised for leaving RBS with out enough economic buffers that can have helped the financial institution to experience out the credit score crunch hit in 2008.

Goodwin used to be well known to be a ruthless boss, incomes his nickname “Fred the Shred” for making harsh cuts to his body of workers amid his growth efforts. That incorporated a choice to slash 18,000 jobs after RBS’ flashy £21bn takeover of NatWest in 2000, one of the crucial greatest cost-cutting workouts in banking on the time.

By the time of the bailout, Goodwin had expanded RBS into 50 international locations and grown its property to £2.2tn – greater than double the dimensions of the United Kingdom financial system that 12 months. Had the federal government did not step in, surprise waves from the financial institution’s implosion in 2008 can have ended in a systemic cave in within the wider financial system.

The executive used to be involved that its failure may just wipe out the financial savings of on a regular basis shoppers, and recommended panic in regards to the well being of different lenders throughout the United Kingdom, making a domino impact of screw ups around the business.

The financial institution’s eventual emergency rescue made Goodwin – now 66 years previous – a lightning rod for public anger over the price of financial institution bailouts, which ended in years of presidency austerity that many blame for hollowing out public products and services around the nation.

Goodwin used to be additionally gradual to express regret for the record-breaking losses that he left in the back of on the centuries-old financial institution. He used to be later stripped of his knighthood in 2012, amid considerations that he had “had brought the honours system in to disrepute”.

The executive has spent just about twenty years seeking to take the financial institution off the general public books, via a mixture of gross sales to institutional traders and a drip-feeding of stocks into the open marketplace. NatWest fast-tracked the method via multibillion-pound proportion buy-backs, serving to the stake drop from 38% in December 2023 to 0.9% previous this month.

NatWest’s present chair, Rick Haythornthwaite, stated remaining month the financial institution used to be indebted to the general public for protecting the lender afloat.

“We remain incredibly grateful to the government, and to UK taxpayers, for their intervention and support, which protected millions of savers, homeowners and businesses at a time of global crisis,” he stated on the financial institution’s AGM in Edinburgh.

He added the federal government used to be at all times anticipated to lose cash at the bailout. “I don’t think they ever went into this is an investment … This was a rescue of a sector, and they did well as a result.”