After spending almost £50 billion on takeovers during his eight years as CEO of the UK’s second biggest bank, ministers were apparently sensitive about placing billions of pounds of taxpayer money into the same hands that brought the bank to the brink of collapse in the first place. Stephen Hester, head of the property giant British Land, is poised to replace him.

Known as a “deal junkie” by discontented investors, Sir Fred masterminded 24 acquisitions from 2002 to 2007, including the £22 billion hostile takeover of NatWest, which was three times the size of RBS at the time. The 18,000 job cuts that followed the deal led to him being known as Fred the Shred, for his cost-cutting enthusiasm. 

Sir Fred’s fall from grace began in 2007 when he led a consortium that acquired Dutch bank ABN Amro for 71 billion euros. After ruling out any new takeovers during an interview a month before – telling journalists no deals were “desirable, do-able or affordable” – RBS formed a conglomerate with Fortis and Santander to bid for ABN. The acquisition was blamed for stretching the bank’s capital reserves.

Fred the Shred was also held responsible for the £5.9 billion written down in assets linked to the toxic US sub-prime assets and the further £12 billion rights issue launched earlier this year.

Sir Fred’s humble departure will be a difficult pill to swallow for the man named “most talented banker of his generation”, however his salary of several million pounds should act as the spoonful of sugar to sweeten the deal. And then there’s the £8.37 pension pot he’ll receive. With this “two steps forward, one step back” pattern, will the Government ever be able to banish the greedy banker reputation of the financial system?