The risks of a dominant chief executive

Sir Fred Goodwin escaped enforcement action by the Financial Services Authority and walked away from the Royal Bank of Scotland with a pension worth £342,500.

But he was heavily criticised today by the authors of the FSA's report into "the Failure of the Royal Bank of Scotland" and some of his former colleagues.

Johnny Cameron, former head of RBS' investment banks told FSA officials the Goodwin's approach to acquisitions "revolved around two things - the revenue synergies and the cost synergies". He added that Goodwin "tended to take an optimistic view and had often in his life been proved right.'

The report said some shareholders felt Goodwin did not fully appreciate: the large, single-name risks arising from RBS's rapidly growing exposures in the syndicated and leveraged-loans markets; and the growing accumulation of risks across the group.

The report's authors found no evidence the non-executive directors on RBS' 17-strong board had been bullied by Goodwin but they added "it was sometimes difficult to raise more general questions or concerns".

The report also revealed that: "During 2003 and 2004, the FSA had identified a risk created by the perceived dominance of RBS' chief executive." RBS' head of Group Internal Audit also wrote: "There have been observations that the group CEO tends to operate too often in the chief financial officer role."