A £600,000-a-year pension, a stunning luxury home and all the time in the world to enjoy it. So is it any wonder Fred the Shred, the man who broke RBS, STILL seems to be laughing all the way to the bank

Daily Mail​

3 days ago

The smiling figure immediately caught the eye as he enjoyed a rare night out in a cosy Italian bistro.
And while the homely charm and authentic cuisine of the Caprese Don Costanza has long drawn the cognoscenti to its basement premises in Glasgow 's smart Park Circus, its discreet attention to its well-heeled clientele of footballers and television personalities might have been equally appealing to this particular diner.
Of course, there was a time when Fred Goodwin would have feasted with princes and presidents, prime ministers and captains of industry, at glittering black tie events at 10 Downing Street and the White House. Then, he was Sir Fred Goodwin, chief executive of the Royal Bank of Scotland and the darling of the City, transformed a once-parsimonious fixture of the Scottish high street into the world's biggest bank.
Born into humble beginnings on a Paisley housing scheme, Goodwin rose to become as famous for his ruthless zeal in cutting both costs and jobs - earning him the nickname 'Fred the Shred' - as he was for his jetset lifestyle of grotesque corporate excess which became the stuff of legend.
Tales like the complete redecoration of the lobby outside his office with wallpaper costing £1,000 a roll because of one tiny stain, or the fresh fruit flown in daily from Paris; or the £5.3million refurbishment of the RBS's rarely used listed building RBS building in Edinburgh 's St Andrew Square which came to be known as the Pleasure Dome with its £100-a-square-yard carpet which the boss ordered to be changed because he did not care for the shade of amber.
He could comfortably afford Costanza's modestly priced menu of classic Italian favourites - and even the most expensive wines on the list, at £310 a bottle, would not have phased a man who has been raking in hundreds of thousands of pounds in pension payouts since presiding over the cataclysmic meltdown of RBS 17 years ago.
Doubtless his income has been swollen by the colossal bonuses he squirrelled away during his eight-year tenure as the bank's infamously ruthless and hedonistic chief executive. Such hubris was clipped in October 2008, however, after he steered RBS over a financial precipice towards a £24.1 billion loss, the biggest corporate deficit in UK history, which cost 26,000 employees their jobs and left the taxpayer with a multi-billion-pound bill for bailing the bank out.
After the bailout, the man who sank the bank was ousted - and, later, famously stripped of his knighthood. He became a pariah, professionally toxic and publicly loathed in a way that others responsible for the financial crash of 2008 never were.
His past indiscretions have cost him personally, too, and hurt his family. His marriage to Joyce, who stood loyally by him through his travails, collapsed amid revelations that he had repaid her faith by having an affair with a colleague. A five-year wait to become a member of the Royal and Ancient in St Andrews, the nation's most prestigious golf club, was politely knocked back.
Now 66, divorced, and in a new relationship, Goodwin is something of a recluse these days - understandably, given that his home was vandalised and he was even subjected to death threats at the height of the RBS debacle, which might well have precipitated the domino-style collapse of the entire British banking system but for the intervention of the state and a £45bn cash injection which left taxpayers saddled with an 83 per cent stake in the rapidly unravelling banking giant.
Seventeen long years have passed and only now is RBS - now subsumed within the NatWest brand - on the brink of returning to full private ownership as the government prepares to sell its final stake in the business. It may draw a line under the catastrophe - but at a substantial cost to the public purse. Ministers are expected to write down a £10bn loss after recouping just £35bn on its loans.
And what of the architect of this disaster? Those who saw him at Costanza's described him as looking 'hale and hearty' as he laughed and joked with friends. 'He looked very relaxed,' observed one fellow customer, 'but then I don't know whether he still gets shouted at in the street like he used to.'
Goodwin has long since made it his business to avoid such bouts of public unpleasantness, largely by avoiding the public as much as possible. Less easy to dismiss are the negative headlines which resurfaced last week about his handsome pension arrangements.
When he initially walked away from the chaos he had unleashed with a £16 million pension pot that paid out about £700,000 a year, a public backlash eventually forced Goodwin and the bank to halve those payouts to £342,500 a year.
After nearly two decades, however, an agreement that linked his payouts to the rate of inflation has pushed that figure ever closer to the original sum. The bank is said to spend around £598,000 annually on Goodwin's pension, according to estimates by the wealth manager Quilter shared with the Guardian newspaper. NatWest Group has declined to comment on the figures while Goodwin remains firmly incommunicado.
Others are more forthcoming. John O'Connell, chief executive of the TaxPayers' Alliance, said: 'Taxpayers bailed out RBS to the tune of £45bn but are now staring down a £10bn loss - while their disgraced ex-boss is raking in a £600,000 pension.
'It's a disgrace that the public is still paying the price for this catastrophic failure, nearly two decades on. Ministers must ensure that this kind of reckless mismanagement is never allowed to happen again, and that taxpayers are never treated as a bottomless pit for failed institutions.'
The latest furore is unlikely to bring the press pack to his door in quite the same numbers it once did. Equally, none of it is unlikely to accelerate Goodwin's civic rehabilitation.
Things remain much quieter these days in the leafy Edinburgh street where he still lives, hidden in plain sight. Amazon delivery drivers and a painter were the main callers at the gates of his home in the Grange last week.
He has plenty of time for his hobbies; a self-confessed car nut, he tinkers with his collection of classic cars, which include a 20-year-old BMW, a Triumph Stag convertible and an elderly Range Rover, and plays golf at the private Archerfield links 40 minutes' drive away on East Lothian's celebrated 'Golf Coast', where members - including Edinburgh's wealthy business elite, and sports stars such as Alan Shearer, Ian Botham and Ryan Giggs - happily stump up the eyewatering debenture of £30,000 in addition to their annual subscription of £2,700.
A keen shot, he also goes shooting with his friends Gerard Eadie, boss of glazing firm CR Smith, and Sir Jackie Stewart, the former Formula One racing driver, who have stuck by him while a multi-million-pound bolthole near Cannes offers another escape. Yet friends in high places have not helped him get back into corporate life. A £100,000 a year consultancy with Edinburgh architects RMJM ended unhappily after less than 12 months and when a former colleague ran into his old boss at Edinburgh airport, the former Forbes Global Businessman of the Year was said to have admitted feeling 'intellectually under-occupied'.
Those who lost their life's savings when the ship went down, including many bank employees, have little sympathy for a man knighted by Tony Blair who lavished RBS profits on luxuries such as a permanent suite at The Savoy costing £700,000 a year, a fleet of 12 chauffeur-driven Mercedes limousines with RBS emblazoned all over them, and an £18 million Falcon 900EX jet with the personalised registration RBSG (Royal Bank of Scotland Goodwin) which he liked to use for weekend boar hunting jaunts in Spain or following the glamorous F1 circuit around the world.
Despite having no formal banking qualifications or technical training, Goodwin led RBS on an aggressive expansion, gobbling up the much larger NatWest and US bank Charter One in quick succession.
He ruled his sprawling Gogarburn campus with a rod of iron. In their book on the banking crisis, Masters of Nothing, the Tory MPs Matthew Hancock and Nadhim Zahawi reveal that Goodwin once threatened to discipline catering staff after they sent up a plate containing a Crawford's pink wafer biscuit. 'Fred controlled through fear. There was nobody in the bank who wasn't afraid of him,' says a former director of RBS.
But he slipped up when RBS teamed up with a consortium to absorb the troubled Dutch bank ABN Amro in a £49 billion deal in 2007 at what turned out to be the peak of the market. The takeover was later described as one of the worst corporate deals in history. When American banking giant Lehman Brothers collapsed a month before RBS in September 2008, it sparked a full-blown crisis in the markets.
By the time it was brought to its knees, on October 13, 2008, RBS had £2.2 trillion of assets - bigger than the British economy - with operations in 53 countries. Yet behind the scenes, the bank was stretched to breaking point. After the bailout, the late Alistair Darling, chancellor at the time, revealed his astonishment when RBS chairman Sir Tom McKillop rang him on October 7 to tell him the bank had just three hours before it would run out of cash.
The damage has been long-lasting. In 2017, the bank coughed up a staggering £1bn (including £100 million in legal fees) to settle a lawsuit by 9,000 shareholders at the High Court, in London, who claimed RBS chiefs duped them into investing in a £12bn 'rights issue' in 2008 by portraying the bank in a falsely favourable light, even though they knew that it was teetering on the brink of the abyss.
Former Prime Minister Gordon Brown, who oversaw the bank's rescue along with Mr Darling, has condemned Goodwin's failure to 'express real contrition to me - or to anyone else - for his role in the bank's collapse'.
Others believe Goodwin's lack of public remorse has prolonged his purdah. One business source said: 'The only time he apologised was at an AGM held, ironically, at the General Assembly building of the Church of Scotland. But it was more him saying, "I'm sorry if you fell", rather than "I'm sorry that I pushed you". It was no kind of apology really.'
The source added: 'He is very rarely seen in Scottish society. But he was always very circumspect; he refused to make an effort to engage with media or stakeholders back in the day. Therefore, there was no goodwill in the tank for him when it all went wrong. He was never very clubbable in that sense..'
Thos who have spent time with him since his fall from grace insist his image as the arrogant financier who got off scot-free is far from the truth. 'He is charming,' says one. 'He was forever sending me little notes of appreciation for anything I did for him. He was absolutely beyond devastated by what had happened. He was unable for the first six months to be able to even speak properly, he was so devastated. He was like a man on the run - trapped and haunted.'
It wasn't always like that. Raised in Paisley's tough working-class scheme of Ferguslie Park with his sister, Dale, and brother Andrew, social ambition ran in the blood. His father, Fred senior's job as an electrical engineer with Balfour Kilpatrick allowed the Goodwins to buy a semi-detached house in a better area nearby.
Contemporaries say young Freddy, as he was known locally, was driven by his dad. When he lost a fight with another boy, it is said Freddy's dad came out and held the boy down behind a lilac tree, while Goodwin punched him in the face. Goodwin said later he has no recollection of the incident.
Fussed over, partly because he was run down and badly hurt on his way home from school when he was eight, Goodwin's sharp brain saw him do well at Paisley Grammar School before he became the first in his family to go to university. Graduating in law from Glasgow, he joined Touche Ross and qualified as a chartered accountant in 1983. Five years later, at 29, he was made a Touche partner.
By 1990, he married Joyce McLean, another go-getting financial whizz who had gained an MBA from Strathclyde University. She forsook her career to become the sort of wife aspiring bankers need, hosting dinners at the elegant Georgian townhouse they acquired, immersing herself in philanthropic work, and caring for their children, John, now 29, and Honor, 26.
Goodwin repaid her loyalty by having an affair with a colleague at RBS, then attempted to cover it up by obtaining a court injunction. His wife apparently had no idea her husband was cheating until May 2011, when the matter was revealed by Lord Stoneham of Droxford, who - in the interest of taxpayers, as he put it - used parliamentary privilege to raise the matter in the House of Lords.
The Goodwins divorced in 2016 and Mrs Goodwin now lives in the £3.5million home on a gated community in Colinton.
When approached for comment last week, a woman answered the door at Goodwin's home. Declining to identify herself, she said: 'He doesn't speak to the press. Thank you very much for asking.'
As ever, the legacy of Fred the Shred's recklessness must speak for itself.