Royal Bank of Scotland will cut more jobs, Chairman Philip Hampton warned on Friday, as he called for an end to the "public flogging" of the state-rescued bank over its past mistakes. In spite of Hampton's attempts to draw a line in the sand, however, RBS shareholders vented their fury over the lender's near collapse last year by making the largely symbolic gesture of rejecting the bank's report on 2008 executive pay.
Amid public anger over the pension of 703,000 pounds ($1 million) a year awarded to former chief executive Fred Goodwin, an overwhelming 90.24 percent of votes were cast against the remuneration report at a shareholder meeting on Friday.
Hampton rounded on Goodwin's legacy, saying his take-over of Dutch rival ABN Amro had been the wrong deal at the wrong price. He also said the bank was taking legal advice over the payout to Goodwin and that new Chief Executive Stephen Hester's contract 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 pound 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.
Echoing comments made last month, Hampton said Goodwin was still thinking about a request made by the company in January that he forfeit some of the pension. "I've spoken to Fred Goodwin on a number of occasions and suggested that it would be sensible if he made a voluntary reduction in his pension. Fred has said a number of times that he would think about that," Hampton said, adding their most recent conversation was earlier this week.
Legal advice on Goodwin's contract was likely to be ready "within the next few weeks", he added. The British government, which became majority shareholder in RBS last October after resuscitating the bank with a 20 billion pound injection of taxpayer money, had previously said it would vote against RBS's 2008 remuneration report.
TIGHT SECURITY Goodwin and the bank have been at the centre of public anger over the near collapse of Britain's banking system. Protesters targeted an RBS branch during this week's meeting of G20 heads of government in London, while windows were smashed and a car damaged last month in an attack on Goodwin's home.
Small shareholders arrived for Friday's meeting amid tight security with their anger and dismay tempered by hopes the bank's new management could orchestrate a turnaround. "Obviously from the reports today the domestic bank is in safe hands," said private shareholder James Hogarth. "Like a lot of people I bought RBS shares with a pension lump sum. It hasn't turned out for the best."
Shares in RBS have slumped from over 600 pence in early 2007 to around 30 pence and Friday's meeting takes place almost a year after RBS launched a surprise rights issues that shareholders subscribed to at 200 pence a share. Having already announced around 2,700 job cuts after RBS chalked up a record 24.1 billion pound loss in 2008, Hampton said it was too early to say how many more jobs would be lost but this was not the end of the process.
WRONG PRICE, WRONG TIME, WRONG DEAL Hampton said shareholder scrutiny and strong disapproval was understandable, but added it was time to move on. "I believe we should bring an end to the public flogging," Hampton said. "We have suffered a major financial hit and continued collateral damage from public criticism will compound the problem not resolve it."
He said the bank had "a clear and agreed roadmap" to return to standalone strength in the next three to five years. RBS's shares were up 6.7 percent at 30.1 pence at 1500 GMT having earlier risen to 33.5 pence - their highest level since mid-January.
The jump came as a deadline loomed for shareholders to subscribe to the bank's latest share issue. Goodwin was widely lauded for his audacious take-over of bigger British rival NatWest in 2000, but his final acquisition - a 10 billion-pound purchase of parts of Dutch rival ABN Amro at the onset of the credit crunch - has been blamed for helping bring the bank to its knees.
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