Fred Goodwin to receive £650,000 for life
This is a story that very briefly left me lost for words (and please don't say "long may it last").
Authoritative sources have told me that Sir Fred Goodwin, the former chief executive of Royal Bank of Scotland - who is widely blamed for the colossal mess it's in - is already drawing a pension of £650,000 a year.
He's only 50 and he's got it for life. His pension pot, which generates the pension, is worth a handsome £16m.
Perhaps unsurprisingly, when I informed the Treasury we were about to run this striking story, I was told that ministers were very unhappy about the generous terms of Sir Fred's early retirement package.
So UK Financial Investments - the offshoot of the Treasury which manages taxpayers' stakes in our big banks - is investigating, with RBS's board, whether there is any way of clawing back some of the pension entitlement (see below for a full copy of a statement given to me by the Treasury).
Now before you pull your hair out, I should mention that Sir Fred didn't take any money by way of compensation from RBS when he left the bank.
And his entitlement to a pension at 50, in the event that he was asked to leave RBS, was an arrangement put in place some years ago and applied to other directors too.
Even so, the disclosure that he's set up very nicely for life will spark some controversy.
After all, RBS will confirm tomorrow that it made record losses for a British bank last year of around £8bn before a massive writedown of goodwill on the takeover of the toxic rump of the Dutch bank, ABN.
And after the goodwill writedown, Royal Bank's losses could be as high as £28bn, a record for any bank.
Its woes of course have led to it being rescued by us, by taxpayers.
We have a 70 per cent stake in RBS and we're about to insure the bank against future losses on £250bn of dodgy loans and investments.
The terms of that unprecedented insurance will also be unveiled tomorrow.
My understanding is that RBS will pay a fee in the form of non-voting shares equivalent to around 2 per cent of the insured assets, so over the five-year life of the scheme we as taxpayers would receive a further stake in RBS worth up to £20bn.
But we may well incur substantial losses on that £250bn.
It's not beyond the realms off possibility that future losses on those impaired assets could be £50bn.
If RBS's existing shareholders were to take the first 5 per cent loss, which seems likely on the basis of the current state of talks between the bank and the Treasury, that would generate a £12.5bn hit for the bank and its shareholders
But 90 per cent of the rest of the loss would fall on the Exchequer, on us as taxpayers - so there could be a total loss for us of up to £33.75bn.
So it's against that background, of taxpayers giving enormous, unprecedented support to this damaged bank, that Goodwin's £650,000 for life may upset a few of you.
PS Here is the Treasury's statement:
"Since they became aware of this issue UKFI have been vigorously pursuing with the new Chairman whether there is any scope for clawing back some or all of this pension entitlement and whether the Board took the decision in the full knowledge of the facts.
UKFI has agreed with RBS that the bank will review all aspects of Sir Fred's tenure in office with a view to testing to the full any potential for legal redress, including the potential for recouping pension provision.
This is another example of the culture of rewards for failure that we are determined to sweep away for the future.
We are committed to cleaning up the banking system - both the financial balance sheets of the banks and behaviour of those who lead them."