- Associated Press - Tuesday, January 31, 2012

LONDON (AP) — Former Royal Bank of Scotland chief Fred Goodwin, who led the bank into near collapse, has been stripped of his knighthood, the British government said Tuesday.

The Cabinet office said the knighthood had been “canceled and annulled” because Mr. Goodwin had brought the honors system into disrepute.

Revoking knighthoods is rare, but the government said that “the scale and severity of the impact of his actions as CEO of RBS made this an exceptional case.”

Mr. Goodwin built the Royal Bank of Scotland into one of the world’s largest banks and was knighted in 2004 for services to banking. But he led the bank to disaster four years later with a takeover of the Dutch bank ABN Amro, paying a high price just as the credit crisis was starting to bite.

Goodwin resigned in October 2008 as the bank was failing, provoking the public’s ire by leaving with 16 million pounds ($25 million) in pension benefits.

The British government spent 45 billion pounds bailing out and nationalizing RBS, and taxpayers now own an 82 percent stake.

The government said that, under the circumstances, “the retention of a Knighthood for ‘services to banking’ could not be sustained.”

In losing his knighthood, Mr. Goodwin joins a group that also includes the spy Anthony Blunt, Zimbabwean President Robert Mugabe and former Romanian President Nicolae Ceausescu.

Mr. Goodwin, 53, is likely to retain his other title of “Fred the Shred,” a tribute to his aggressive cost-cutting while expanding RBS.