The banker who wouldn't say sorry

He may have been forced to resign as chief executive of the Royal Bank of Scotland after going cap in hand to the Government for up to £20bn, but there was one thing Sir Fred Goodwin could not utter. Sorry is always the hardest word. Sir Fred, who earned £4.1m last year, said he would not have chosen to leave in the circumstances under which he is stepping down, but declined invitations to apologise for events that have seen RBS transformed from one of the top 10 banks in the world to a state-controlled lender.

RBS had already tapped shareholders for £12bn in June to shore up its threadbare safety buffer, but the record rights issue did nothing to maintain confidence. The bank was left exposed by its takeover of the Dutch bank ABN Amro last year and was hit by £5.9bn of losses this year after expansion into racy credit markets, including parcelling up sub-prime loans in the US.

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Asked if he would like to apologise for the ABN deal, Sir Fred said: "The takeover of ABN Amro is not the cause of all this. We would be having a lot of these write-downs and difficulties and the world would still be in a financial crisis." He will leave once he has handed over to Stephen Hester, the boss of British Land. Sir Fred said he would waive his right to a £1.2m payoff when he leaves, but he will be entitled to an annual pension £579,000.

Sir Tom McKillop, the chairman, who will stand down at next year's annual meeting, said there was "some contrition" about the bank's plight. Johnny Cameron, who runs the financial markets business that incurred the credit losses, left the board yesterday. His fate will be decided by Mr Hester.

Andy Hornby, the chief executive of HBOS, and his chairman, Lord Stevenson of Coddenham, will also lose their jobs when Britain's biggest mortgage lender is swallowed by Lloyds TSB early next year. Mr Hornby is forfeiting his £940,000 payoff and Lord Stevenson will waive £710,000.

Sir Fred is just one of several victims of a crackdown on the City bonus culture championed yesterday by the Prime Minister. Senior executives at Royal Bank of Scotland, HBOS and Lloyds TSB are set to miss out on an almost £20m payday this year after Gordon Brown promised to wage war on bonuses for the bailed-out bankers.

Announcing the £37bn rescue package for banks, the Prime Minister attacked the culture of excessive bonuses, saying he wanted to "bring an end to rewards for failure", adding: "The guiding idea is fair reward for hard work, effort and enterprise, not incentives for irresponsibility or excessive risk-taking for which the rest of us have paid." He said the banks need to create "a system of remuneration founded on long-term success, not short-term irresponsibility".

Mr Brown's warning was backed by a notice from the Financial Services Authority, which wrote to all the chief executives of UK banks complaining that "inappropriate" bonus schemes were contributing to the crisis in the markets. The FSA's chief executive, Hector Sants, wrote of the "widespread concern that inappropriate remuneration schemes may have contributed to the present market crisis".

Three of the four other directors at RBS also received seven-figure performance fees in 2007. RBS said it would ban the bonuses this year, and look at an incentive scheme based on share awards from next year. At Lloyds, the chief executive, Eric Daniels, was awarded a bonus of £1.7m last year, part of an executive bonus pool worth £5.9m.

HBOS executives shared £3.9m. Peter Cummings, chief executive of corporate business, received a bonus of £1.6m, while chief executive, Andy Hornby, was awarded £449,000.

While the bonus crackdown will apply to board directors, RBS insisted yesterday that it would continue to offer "competitive" remuneration packages. City recruitment experts said bank staff below the top level were likely to continue to receive large payments, depending on performance.

The Centre for Economics and Business Research reported last week that bonuses in the City could plunge by more than half this year. in 2008, the bonus pool was £8.5bn. The research group has already slashed its predictions from £5bn, and predicted it could hit as low as £3.6bn as bonuses are restructured and headcount is cut.

The investment bankers tend to take the headlines when it comes to giant bonus payments. Among these were Bob Diamond, the president and head of investment banking at Barclays. His base salary was £250,000 last year, but with bonuses and options, his total remuneration was worth £18.5m.

Jon Moulton, the boss of the private equity group Alchemy Partners, told the Treasury Select Committee that linking bonuses to employee performance over just a year was "absolutely wrong". "Salaries can be high but it's the incentive payments that do the damage," he said.

The FSA's letter comes after the regulator held a series of "high level" discussions with London firms over their remuneration policies. it intends to visit the companies who have received the letter but would not become involved in setting remuneration levels.

The TUC criticised the regulator's move as too soft yesterday. Brendan Barber, the general secretary, said: "Today's FSA letter ... simply sets out boxes to tick, and it has no teeth. We take the rather old-fashioned view that bankers, like the vast majority of people at work, should be paid a proper wage for doing a good job, and should not require bonuses to get up in the morning."

The banking business: The bosses and their bonuses

HBOS: Andy Hornby, Chief executive
Salary: £940,000
Bonus: £450,000
Total: £1.39m

Lloyds TSB: Eric Daniels, Chief executive
Salary: £960,000
Bonus: £1.81m
Total: £2.77m

Barclays: John Varley, Chief executive
Salary: £980,000
Bonus: £1.43m
Total: £2.41m

RBS: Fred Goodwin, Chief executive
Salary: £1.29m
Bonus: £2.86m
Total: £4.15m