Friday, February 06, 2009

Citibank and Bank of America: Pay Attention

Citi and BofA, this is how it is supposed to work. Perform or you're history. The government is now the largest shareholder and they are doing what should be done and that is clean house. Limiting salaries is a start and perquisites have to be next but dumping overpaid board members has to be a priority as well. There should be consequences for sitting there and doing little more than cash in while the banks went down the tubes.
Philip Hampton, the new chairman of Royal Bank of Scotland, is wielding the axe in the loss-making bank's boardroom in a determined effort to exert his authority over the troubled operation.

Seven non-executives are expected to leave the board as Hampton roots out some of the longest-standing members of a board that presided over as many as 24 acquisitions during the eight years in which ousted chief executive Sir Fred Goodwin was at the helm. The taxpayer will soon own 70% of the bank.

The dramatic clear-out of the RBS board will include the long-standing non-executive directors Peter Sutherland and Bob Scott, the senior independent director who was the main point of communication for disgruntled shareholders.

The former Treasury mandarin Sir Steve Robson is also expected to depart along with Jim Currie, Janis Kong, Charles Koch and Bill Friedrich.

Their departures will signal a major change in the management of RBS, which the former chairman Sir Tom McKillop was forced to defend last year when he declared there were "no patsies" on the board.

Three new government-approved non-executive directors will join the board as stipulated by the government as a condition for the injection of £20bn of taxpayer funds. Those appointments were being finalised last night and could be announced as soon as today.

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