“The failure of RBS played an important role in the financial crisis of 2008-9 which, together with other macroeconomic factors, triggered the worst recession in the UK since the Second World War and imposed significant direct costs on British taxpayers and businesses,” the government said in a statement.
“Fred Goodwin was the dominant decision-maker at RBS at the time,” it added, explaining a decision taken by a committee of civil servants. RBS owns Ulster Bank.
Goodwin had been awarded the knighthood in 2004 for services to banking, but has since come under heavy criticism from the public after taxpayer funds were used to bail out the stricken bank.
The government said it would soon be announced that Goodwin’s knighthood had been “cancelled and annulled”.
The Scottish banker spearheaded RBS’ disastrous acquisition of Dutch bank ABN AMRO, which nearly caused the collapse of RBS during the 2008 crisis.
RBS ended up having to be propped up with £45 billion (€54bn) of taxpayers’ money, with the government getting an 83% stake in the bank.
It is very rare for Britain to strip people of their knighthoods, and Goodwin joins the ranks of figures such as former Romanian dictator Nicolae Ceausescu who forfeited an honorary knighthood.
For many in Britain, the woes of RBS have come to symbolise more serious problems with the country’s banking industry.