A management buyout of the Royal Bank of Scotland's 50% share in ABN Amro Craigs has put the full ownership of the sharebroker into the hands of about 130 senior employees.
Reports that 60 employees would lose their jobs because of the buyout circulated yesterday, soon after the announcement was made public.
ABN Amro Craigs chief executive Frank Aldridge said the firm was in negotiations with RBS staff who had worked for ABN Amro NZ Ltd with the prospect of taking some of them on.
Some of the RBS staff would become shareholders in ABN Amro Craigs.
For ABN Amro Craigs, it meant the company had the ability to extend into wholesale broking - institutional investors, capital finance and mergers and acquisitions. Retail broking would continue as normal.
"There will be no change to the operations of our business, the people leading the business or those advising our clients. We will be using exactly the same systems and compliance processes built up over the last seven years, under the joint venture with ABN Amro," Mr Aldridge said yesterday.
The staff-only ownership structure allowed the firm to control its own future, he said.
The financial services industry was changing rapidly and the opportunity to buy out the RBS share presented itself from circumstances unrelated to the firm's own strong position.
"The buy back and expansion into wholesale services will place us in an excellent position for future growth and take advantage of any opportunities as they arise," Mr Aldridge said.
Media reports from London yesterday said the dramatic fall of Royal Bank of Scotland needed a villain, and the British government angrily found one: Sir Fred Goodwin, the former high-flying chief executive officer who has been widely blamed for leading a disastrous takeover of a Dutch bank.
As RBS reported a British record loss of 24.1 billion ($NZ68.36 billion) and attention turned to multi-billion-pound plans to keep the bank afloat, one figure leaped out: Mr Goodwin's pension is 693,000 a year, double what was previously reported.
"A scandal," said John McFall, chairman of the House of Commons' Treasury committee.
"I became aware of this deal only a few days ago and I immediately demanded action on it," Prime Minister Gordon Brown said.
Treasury chief Alistair Darling called on Mr Goodwin to hand his pension back; if not, Mr Darling was talking to lawyers about taking action.
"People will find it very difficult to understand how you can get paid 650,000 a year for the rest of your life when - just look at the state RBS is in at the moment," Mr Darling fumed in an interview with BBC radio on Thursday.
But Mr Goodwin (50) fired back, writing a letter to junior treasury minister Paul Myners, claiming that the Government had been aware of his pension for months and that he had no intention of parting with a penny.
In the letter, posted to the British Broadcasting Corp's website, Mr Goodwin said his upgraded pension was compensation for lost income when he stepped down in November after the government invested 20 billion in a 58% stake to save his bank from collapse.
"You indicated that it was both appropriate and sufficient recognition of the circumstances," Mr Goodwin told Mr Myners, according to the BBC.
The figure was front page news across Britain, drawing comment from across the political spectrum.
"This is an example of hubris on Sir Fred's part bringing a once proud institution, the fifth biggest bank in the world, down to its knees, and then leaving with not just a good pension, but a pension which is eye-watering in terms of its sums," Mr McFall said.
Britain's opposition Conservatives demanded to know who knew about the pension, and when.
"If Gordon Brown and Alistair Darling allowed Sir Fred to walk off with 693,000 a year for life of taxpayers' money, it would be a disgrace," Conservative lawmaker George Osborne said.
ABN Amro Craigs
• Management buyout.
• Seventeen branches - largest NZX participant investment advisory firm.
• About 110 investment advisers and $4.5 billion funds under management.
• Staff shareholders reached 130 yesterday.
• New corporate name.
