Business | Banking
RBS to cut more jobs, seeks end to 'public flogging'
Chairman says 'unacceptable practices' of the past will stop and new CEO will not be rewarded for failure.
- Reuters
- Published: 23:01 April 3, 2009
London: Royal Bank of Scotland will cut more jobs, Chairman Philip Hampton warned yesterday as he called for an end to "public flogging" of the state-rescued bank over its past mistakes.
Hampton rounded on the legacy of former chief executive Fred Goodwin, saying in a speech to be delivered to shareholder meetings that his takeover of Dutch rival ABN Amro had been the wrong deal at the wrong price.
Addressing widespread public anger over the pension of £703,000 a year awarded to Goodwin, Hampton also said the bank was taking legal advice over the payout and that the contract of the new chief executive, Stephen Hester, ensured no more rewards for failure.
"Some of the practices that were accepted at the height of a boom when the bank was recording £10 billion profits, cannot be acceptable now if indeed they ever really were," Hampton said, pointing to sponsorship of Formula 1 motor racing and an order for a corporate jet that has now been cancelled.
The British government, which became majority shareholder in RBS last October after resuscitating the bank with a £20 billion injection of taxpayer's money, has already said it will vote against RBS's 2008 remuneration report.
"I do understand that many shareholders will wish to vote against or abstain on the advisory vote on the Remuneration Report to register their strong disapproval of the pension arrangements of our former chief executive," Hampton said.
Goodwin and RBS have been at the centre of public anger over the near collapse of Britain's banking system and protesters targeted one of the bank's branches during the meeting of G20 heads of government in London last week.
Having already announced around 2,700 job cuts so far this year after RBS chalked up a record £24.1 billion loss in 2008, Hampton said it was too early to say how many more jobs would be lost.
"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."
He also promised a return to paying dividends "as soon as practicable" and a comprehensive review of remuneration.
"Our new chief executive 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.
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