The Dawn Of A New Era

RBS finally gave us the full force of the bad news this morning. It was nothing less than what we expected, to be fair, as they clocked up UK Corporate record losses of £24.1bn for 2008.

It means the bank will be radically reformed and the first thing that will happen is that around £325bn will be sidelined as bad debt and insured under the Government's Asset Protection Scheme which will allow it get back to lending to firms and individuals.

Chairman Philip Hampton blamed the loss of 'massive turbulence' in the financial market - absolutely nothing to do with the massive over-extension of the company through raising borrowing under Fred Goodwin.

Outcomes

One of the most obvious effects of this massive loss, aside from the minor detail of largescale unemployment, is that sport will be hit big time. RBS had embarked on an unprecedented spending spree to sponsor sport and sports people making several famous individuals highly paid ambassadors to sport for RBS - some appointed just weeks before RBS' demise. These include Sachin Tendulkar, Jack Nicklaus, Jackie Stewart and Zara Phillips. Many other sports will be deeply affected by the loss of RBS money and F1's Williams Team will need a new sponsor soon as will Andy Murray to name a couple while the deal with the RBS Six Nations was recently extended. However most deals have a longevity to them so they are no way immediate cuts.

Some Things Remain The Same

But warm your heart as some things about RBS remain the same. Thankfully the £650,000 annual pension granted to ex-CEO Fred Goodwin remains in place and he can draw it merrily. He is just 50 years old and he has a pension pot worth £16m .

Sir Fred was the man at the helm when the proverbial hit the fan and he was the man who out-white-knuckle rode the competition to buy ABN AMRO Bank who were widely seen as the most vulnerable to the credit crunch, handily placing them in the taxpayers' check out trolley when the music stopped on the merrygoround. RBS is now 70% owned by a group of notsowell-heeled mugs called The Taxpayers.

Treasury Minister Stephen Timms has realised that this pension payment is slightly embarrassing when read in conjunction with record losses and so he has has UK Financial Investments Ltd, the company set up to manage our portfolio of dead donkey companies we now own, to try and claw back some of the payment.

We all know Gordon Brown was 'angry' about bonus payments being made after the Government bail outs as if he was totally unaware that banks pay them when he negotiated the clever deals to save them. Now his Ministers seem dumbstruck by the intensity of the money-siphoning bank executives were guilty of and seem once again not to have anticipated such embarrassing details coming to light later. Why Timms cannot just instruct a lawyer to go and claw the money back is beyond me but once again the dark influence of the banking advisers at the side of the Government's decision making seem to be at work.

They seem to divert the PM's attention from the obvious and make him focus on the 'Big Picture' - how to make a small number of people very rich again at the expense of smaller individuals and companies.

So Fred Goodwin has the last laugh - after being fired he had set himself up for life, we find. All very convenient, it's as if he always had his insurance policy ready and that the Ministers who presided over the incompetent bail outs never suspected.

To my mind it proves that Goodwin and others knew far more about the possible outcomes than they make out.

The Obvious

There are two things that struck me about Fred Goodwin's disgusting pension situation. One is that he should be personally appealed upon at minimum to defer any pension until he is at genuine retirement age rather than just firing age. The second, who on earth granted such a show of appalling largesse?

Company Remuneration Committees are generally the odd company executive and then a bunch of relaxed, well-heeled Non-Executive Directors who are too fat, rich and have too many other such freebie engagements with other companies to either notice or care about what is going on. They are not going to rock the boat and stop executives paying themselves ludicrous bonuses or grant daft pension rights as they can easily be voted off at the next Board Meeting - so they just nod, take the free lunch and pick up the cheques.

Something has to change. The UK must break this stranglehold of members of the Non-Executive Club who have portfolios of watchdogs and FTSE 250 companies where they literally do nothing and get fat fees - making sure their pet executives who pay them get what they want.

Defined Benefits

Goodwin argued at the Treasury Committee that he had the same pension as everyone else at the bank - a defined benefits scheme. I suspect his worked slightly better than the other thousands of staff who will shortly lose their jobs due to his incompetence.