Goodwin's RBS dream was a deal too far

By Steve Slater

LONDON (Reuters) - Fred Goodwin became Europe's highest profile casualty of the credit crunch after striking a deal too many at Royal Bank of Scotland (RBS.L).

RBS was on Monday forced to get 20 billion pounds ($34.5 billion) in emergency funds. Chief Executive Goodwin stepped down, and Chairman Tom McKillop will follow next year.

Goodwin, a steely Scot, was the longest serving boss of a UK bank after becoming chief executive in 2000, but paid the price for his ill-timed takeover of parts of ABN AMRO last year.

Nicknamed "Fred the shred" after cutting jobs and squeezing out savings in his previous job and then again through a series of deals at RBS, he propelled the Edinburgh-based lender to a position as one of world's top banks before a fall from grace over the past year.

RBS's part in the consortium takeover of ABN was struck just as bank share valuations collapsed, stretching capital too thin and increasing losses on risky assets.

Goodwin has built a reputation for an eye for detail, and the way he ran RBS's integration of NatWest has been held out as a model, but ABN proved a deal too far for shareholders.

He had already been criticized for the $10.5 billion takeover of U.S. bank Charter One in 2004, which prompted one analyst to accuse him of megalomania.

He came under further pressure after a 12 billion pound rights issue in June. A second fundraising is often accompanied by a CEO resignation, as other banks have also shown.