Downing Street Says » Royal Bank of Scotland

Asked if the Prime Minister had anything to say in relation to Sir Fred Goodwin s pension, the Prime Minister s Spokesman (PMS) said that the Prime Minister would be saying something on this throughout the course of the day. For now it was best to refer to what the Chancellor said on the Today programme this morning.

Asked if the Prime Minister had spoken to Sir Fred Goodwin, the PMS said that the City Minister, Lord Myners, had spoken to Fred Goodwin on behalf of the Government, as the Chancellor made clear this morning.

Put that the Chancellor raised the prospect of taking legal action to recover some of the money used in pension provisions, the PMS said that that was something we wanted to thoroughly explore. The statement released by the Treasury yesterday made clear that we had been discussing and pursuing this with the new chairman of RBS to see if there was any scope for clawing back some of the pension entitlement. The Treasury also said that they had agreed with RBS that the bank would review all aspects of Sir Fred Goodwin s tenure in office, with a view to testing to the full any potential or legal redress, including the potential for recouping pension provisions.

Asked if the Government would now go through all other banks they had a stake in to look at packages similar to Sir Fred Goodwin s, the PMS replied that, as we had said a couple of weeks ago when the similar issue of bonuses came up, we wanted to test the nature and strength of legal commitments that had been entered into, particularly for those people most closely associated with the failure at these institutions.

Put that the former Chief Executive of Northern Rock, Adam Applegarth, was getting an annual pension of 200,000, the PMS said that he was not aware of the details of Mr Applegarth s pension. There were legal entitlements that certain people had, but we would look into whether there was scope for these entitlements to be challenged.

Asked if the Government had been fully aware of Sir Fred Goodwin s pension when it took over the majority share of RBS, the PMS said that, as Lord Myners and the Chancellor had been saying this morning, we only became aware of certain details of the pension scheme recently, within the last week or so.

Asked why the Government hadn t been aware earlier, the PMS said that we had announced our intention to take on the majority shareholding in October 2008, but we only took on our legal responsibilities in December 2008. Therefore, a thorough process was underway in relation to a whole range of activities and obligations of these institutions, be it excessive sponsorship arrangements, the bonus culture, pension entitlements or bank balance sheets.

Put that it had been suggested that the law should change if the Government failed to claw back some of the money tied up in Sir Fred Goodwin s pension package, the PMS said that the Chancellor had set out the Government s approach this morning. Firstly, we would explore every legal avenue available to us in relation to this matter and secondly, Sir Fred Goodwin could consider the options available to him in relation to his pension.

Asked what the position was with other executives, the PMS said that RBS was a publicly listed company and that sort of information would normally be available in its annual report.

Asked how much time Sir Fred Goodwin had to make a decision regarding his pension, the PMS said that, as Lord Myners said this morning, people should talk to Sir Fred Goodwin about his response. We were continuing to look at all the legal options available to us.

Asked if it would now be the principle that banks who had been bailed out by the Government would have their chief executives penalised financially, the PMS said that in the case of RBS there had been a very significant failure of management of the like that had rarely been seen in British corporate history, shown by the scale of their losses today. In those circumstances it was right to examine the legal justifications for whether or not people associated with the failure were entitled to rewards.

Asked if the same applied for HBOS, the PMS said that we were continuing to look at HBOS.

Asked for details regarding the conversation between Lord Myners and Sir Fred Goodwin, the PMS said that there was nothing to add to what Lord Myners had already said this morning.

Asked if the Prime Minister intended to get directly involved, the PMS said that the Prime Minister was very concerned about this situation and when he became aware of it, he and the Chancellor asked UK Financial Investments to pursue the matter with RBS.

Asked if the Prime Minister recognised the argument from some backbench MPs that the Government should have acted earlier in regards to pensions and bonuses, the PMS said that we had taken action as soon as we became aware of the specifics of this case. We instructed UK Financial Investments to pursue this matter vigorously with RBS, so we would not accept that we should have acted sooner.

Asked if, in relation to the package announced today, the Government had deployed all its tools, the PMS said that we would not say that; we had always made clear that we would do whatever it took in order to ensure that we could steer the British economy, British families and businesses, through what was a very difficult global economic downturn.

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» Thursday, February 26, 2009

Royal Bank of Scotland

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