For more than a decade Sir Fred Goodwin, the former RBS chief executive, was one of Gordon Brown’s closest allies in the banking industry, advising the Treasury and taking part in key task forces until his dramatic fall from grace last October.

The Prime Minister sought to distance himself from his former confidant yesterday, denouncing Sir Fred’s behaviour as irresponsible and hinting at sanctions from unspecified authorities.

Asked at a press conference whether Sir Fred should lose his knighthood, Mr Brown replied: “It is not for me to talk about what action, for example, the Financial Services Authority, or any other authority, takes.”

Before 1997 Sir Fred was cautious towards Labour and Mr Brown, but his attitude changed after Labour’s landslide victory and by 1999 Sir Fred – then group deputy chief executive at RBS – was chairing a Treasury taskforce on credit unions.

His involvement ensured that he had cordial relations with everyone at the top of the Treasury, and he enjoyed praise from ministers and the benefits of being seen to promote Mr Brown’s agenda.

From then on Sir Fred was a regular visitor to No 11, one of the few City big-hitters to give advice to the Chancellor. He was also well known to Tony Blair, with both men present at Chequers in February 2001 at a gathering described in The Times as a meeting to keep the banks on side before the election.

Sir Fred received his knighthood in 2004 for services to banking and by 2006 he was a member of Gordon Brown’s International Business Advisory Council. They remained close, even after Sir Fred forced through the acquisition of ABN Amro, which marked the start of RBS’s downfall.

Their relationship started to sour after the start of the credit crunch, when Mr Brown made clear that the quid pro quo for state help was that banks should come clean about the full extent of their losses – something that Sir Fred was reluctant to do. His failure to comply put a strain on their relationship, and when the Treasury took a stake in RBS last October, Sir Fred found himself without a job.

The final straw for Mr Brown came in recent weeks when government officials found that RBS had inherited huge loans to Russian and US figures, which it was never likely to get back.

“Yes, I’m angry about what happened at the Royal Bank of Scotland,” Mr Brown said. “Now we know that so much was lost in sub-prime loans in the US and now we know that some of that was related to the purchase of ABN Amro, I think people have a right to be angry that these write-offs are happening.”

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