Sept. 14 (Bloomberg) -- Former U.K. Treasury Minister Paul Myners said his failure in 2008 to curb the pension of former Royal Bank of Scotland Group Plc Chief Executive Officer Fred Goodwin was “not my finest hour.”
Myners, a member of former Prime Minister Gordon Brown’s Labour government, faced criticism after allowing RBS to grant a 703,000-pound pension ($1.1 million) to Goodwin, who presided over the biggest loss in U.K. corporate history. Goodwin voluntarily reduced his annual payout after a public outcry.
“I exhibited some naivety,” Myners told the Treasury Select Committee at a hearing in London today. “I was very new into my job and I look back on that particular evening of Saturday the 11th of October at 5.45 p.m. when I discussed Fred Goodwin’s pension and realize that it was not my finest hour.”
Then-Chancellor Alistair Darling criticized the size of the payout, which Goodwin initially agreed after a weekend of negotiations on Oct. 13, 2008, the same day the bank’s bailout was announced. Myners told lawmakers last year that he didn’t know he could have had the payout reduced. Goodwin has since voluntarily reduced it to an annual 342,500 pounds.
“I will continue to argue that the decision that was taken on Sir Fred Goodwin’s pension was taken by the board of directors of Royal Bank of Scotland,” Myners said.
Myners said that the episode has since left him associated with Goodwin’s pension pot in people’s minds.
“I feel rather like an Oxfordshire village with a sign outside saying that it’s twinned with another town elsewhere in Europe,” Myners said. “I am now forever twinned with Sir Fred Goodwin and his pension.”
RBS, 83 percent owned by the British taxpayer, was the biggest of the four banks rescued by the government in 2008. The lenders’ failures have sparked a move to tighten banking regulation after the financial crisis sparked the U.K.’s worst recession since World War II.
Asked whether some British banks’ threats to move their headquarters overseas should be taken seriously, Myners said the current government needed to tone down its language to avoid it.
“We would be misleading ourselves if we didn’t recognize that some of our major banks could relocate and may conclude in certain circumstances that it is in their shareholders’ interest that they did so,” Myners said. “That would be a great shame and I think it’s entirely avoidable, but the language from government about banking also needs to be more moderated than it has been.”
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