TODAY'S Bulletin has a headline Reports that Fred Goodwin is on the island set me thinking why is there all this attention over one man's pension however large? Is it mainly to distract our attention from the major penury that awaits when the billions of borrowed money has to be repaid? On the island we are already being struck and have more to come as the devalued pound dissuades UK tourists from coming to our euro resorts. As more quantitative easing occurs (the term printing money is not PC) the worse we will be affected.
It also set me thinking about the man himself. As a highly rated businessman with a succession of brilliant deals and takeovers he was recruited by the chairman of the Royal Bank of Scotland as deputy CEO in 1998 with the specific remit of putting it among the top UK banks. He was 40. He became CEO in 2001. At its peak in 2007 the bank had quadrupled its assets, tripled its profits and become Number 5 in the world by market value. He had exceeded the wildest hopes of the company. The great and the good piled honours on him
2002 Forbes Businessman of the Year
2003 European Banker of the Year
2004 Knighthood
And just last year 2008 Honorary Fellow of the London Business School
I imagine that just like a football manager being asked to take on a lowly club with unrealistic goals he would drive a hard bargain. In addition his reputation was in deal making so he would have negotiated a water tight contract in case of failure. No doubt to get rid of him may have cost perhaps every penny of the £639000 annual for the next 10 years until he reaches his retirement at 60. Then no doubt his real pension will kick in.
What if I'd been COE in a rival bank and had the foresight to see the future. Let's go back to 2001 when I try to convince my board about the dangers of Subprime Loans and Leveraged Buy Outs. I succeed but next year there are share holder rumblings about our stock performance compared to Northern Rock and even staid RBS. I get by again but by 2003 I am given the choice to get with the highly profitable banks or be voted out of office. Goodwin can be seen in a different light.
He achieved and excelled the targets set by his company. He used the same special skills to negotiate solid contracts for the benefit of RBS and himself. If he had pressed for a more conservative approach it would have been rejected and him too. He made a great misjudgement as did Forbes Magazine, the London Business School and the Queen.
Mike Lillico
Playa de Palma
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