Fred Goodwin

For other people named Frederick Goodwin, see Frederick Goodwin (disambiguation).

Sir Frederick (Fred) Anderson Goodwin DUniv, FCIBS, FCIB, LLD (born 17 August 1958) is a Scottish banker, the current chief executive of the Royal Bank of Scotland Group.

Biography

Born in Paisley, Renfrewshire, his mother was of German Jewish heritage, his father is a Scottish Protestant. Goodwin attended Paisley Grammar School, before studying Law at Glasgow University. He joined accountants Touche Ross, and qualified as a chartered accountant in 1983. He became a partner in 1988 and won his spurs as chief operating officer of the worldwide liquidation of Bank of Credit and Commerce International in 1990. At 32, Goodwin was in charge of 1,000 people with teams from London to Abu Dhabi and the Cayman Islands that eventually got back half the money from one of the most complicated, high-profile financial frauds ever.

Goodwin was then headhunted for the job of deputy chief executive of Clydesdale Bank in 1995, then as CEO at Clydesdale Bank and Yorkshire Bank from 1996.

RBS

He joined RBS in 1998 as deputy CEO to now retired Chairman Sir George Mathewson. He rose to CEO in 2001. At the height of the NatWest takeover battle, there were murmurs from both the target and rival Bank of Scotland that Mr Goodwin was too young to run a major public company. He obtained his moniker Fred the Shred from City financiers, having gained a reputation for generating cost savings and efficiencies whilst at Clydesdale, and continued following the acquisition of NatWest by RBS. It is rumoured that while at RBS he was mugged at one of his own cash machines after his chauffeur stopped so that he could get some cash. The assailant apparently snatched his bank card while Goodwin's chauffeur waited nearby.

Expansion of RBS

Following the NatWest takeover, RBS made a string of further acquisitions around the world, including the purchase of Irish mortgage provider First Active and UK car insurer Churchill. It also bulked up its US Citizens Financial, Inc arm with a string of further deals. Then in May 2004, RBS said it would purchase Charter One Financial Inc. of Cleveland, Ohio for $10.5 billion. The deal, criticised by analysts for being at too high a price, spread the RBS's banking web across the Midwest for the first time, and made its U.S. banking operations No. 7 in the United States.

Since Goodwin took over as chief executive, RBS's assets have quadrupled, its cost-to-income ratio has improved markedly, and profits have soared. In 2006 pre-tax profits climbed 16% to £9.2 billion with most of the growth coming from its investment banking business. RBS now numbers among the top ten banks in the world.

Banking experts have claimed that Goodwin's success in acquisitions, notably that of NatWest, lies in his disciplined approach. Before deciding to do a deal, he does an unusual amount of due diligence. In the Charter One deal, RBS claims to have spent 500 man-days (the equivalent of 100 people working for five days) examining the bank's books. Charter boosted the amount of pre-tax profit RBS gets from the U.S. and put RBS in a position to expand further.

However, following investor unrest in the build-up to RBS's acquisition of a minority stake in Bank of China in 2005 Goodwin was criticised by some RBS shareholders for putting global expansion ahead of short-term financial returns. This caused its share price to plateau at around £18 per share. Goodwin was accused of megalomania by some shareholders, as reported by Dresdner Kleinwort analyst James Eden (who said he thought the label was 'unwarranted'). After the Bank of China deal, he was forced to promise RBS shareholders he would not indulge in any further big acquisitions and focus instead on growing the group organically.

Environmental and Social Controversies

RBS has had been involved in an increasing number environmental and human rights controversies since Sir Fred Goodwin took the helm in 2001. RBS is heavily involved in financing large oil, gas and mining projects world-wide that environmental organizations like BankTrack, [1], Pacific Environment, The Cornerhouse, and Rainforest Action Network call “dodgy deals” that they say severely damage the environment and local communities, and that contribute significantly to climate change. A profile by BankTrack tracks RBS financing of corporations involved in the production of uranium weapons, as well as the controversial Baku-T’blisi-Ceyhan oil pipeline transecting Azerbaijan, Georgia and Turkey, the Sakhalin II oil and gas scheme in eastern Russia, the Freeport McMoRan mine in Indonesia, Sinopec oil and gas in Burma, the Dynegy coal fired power plant and mountaintop removal coal mining in the US.

On January 17, 2008 environmental groups wrote to Sir Fred Goodwin to urge him to exercise his leadership to resolve environmental problems associated with the ABN AMRO-financed Sakhalin II project (RBS, Fortis and Banco Santander acquired ABN AMRO in 2007). In a response from a subordinate, RBS refused to comment on the specific Sakhalin II allegations.

Quote, 6 December 2006, Sir Fred Goodwin

" We don't need to make any big acquisitions now, and the real message in the trading update is that we are generating results ahead of expectations on a purely organic basis, and that feels like a pretty good place to be. "

The position was reversed on April 13 2007, when Royal Bank of Scotland contacted ABN AMRO to propose a deal in which a consortium of banks including RBS, Fortis and Banco Santander Central Hispano would jointly bid for ABN AMRO and thereafter, break up the different divisions of the company.

In June 2004, RBS admitted that it owned a Dassault Falcon 900 jet worth £17.5m for the use of Goodwin and the board, a fact not disclosed in the annual report. Based in Paris for maintenance and tax purposes, the jet is also leased to the banks clients via Lombard. Goodwin's salary, nominally around £3.5 million on target including bonuses, for 2006 could top £8 million in cash and shares.

Outside Banking

Goodwin has chaired various government task forces including examining the work of credit unions and the New Deal programme. He is chairman of The Prince's Trust and a former president of the Chartered Institute of Bankers in Scotland.

Awards

• December 2002 - Forbes "Businessman of the Year"" by the global edition, which described him as an original thinker with a fast-forward frame of mind who had transformed RBS from a nonentity into a global name by making almost inhuman demands on his staff.
• April 2003 - No.1 in Scotland on Sunday’s Power 100
• December 2003 - "European Banker of the Year" in 2003
• June 2004 - Knighted in the Queen's 2004 Birthday Honours list...... for his services to banking.

Quotes

• "He’s not desperately patient" a Royal Bank executive
• "There may be some possible mercy killings" Goodwin on the possibility of RBS being allowed to pick up one or two of the UK’s smaller financial services groups
• "It's large, it's well-ordered, there's prosperity. And we speak the same language - or almost." Goodwin on RBS's expansion in the United States. Since acquiring NatWest, Goodwin has focused most of his energy on the U.S. market. He has impressed investors with his choice of U.S. banks to buy, tending to buy small banks that have little risk
• "Anyone who thinks nothing has changed in banking for the past five years is a bit detached" Goodwin on former telecoms regulator Don Cruickshank’s claim that banks were still ripping off customers five years after his report to the Treasury
• "We don't need to make any big acquisitions now, and the real message in the trading update is that we are generating results ahead of expectations on a purely organic basis, and that feels like a pretty good place to be." 7 December 2006

Personal life

In 1990 Goodwin married Scottish-Irish Catholic Joyce Elizabeth McLean, and they have two children and live in Edinburgh. He apparently loves fish and chips and says one of his hobbies is doing up classic cars - the first, a Hillman Imp from the proceeds of a summer job at a Scottish power station. He presently owns a Triumph Stag. Other pastimes are shooting and golf.

External links

• A Business Week profile of Fred Goodwin
• Profile at rbs.com

News items

• The Times article April 2008
• Background on NatWest takeover
• Sunday Times article on Dassault jet
• BBC News item on Queen's Birthday Honours, 2004
• Goodwin's Turning Point from Sunday Herald - a low point for Fred, 2005