The report is from the CNBC’s UK exchange newsletter this week. Every Wednesday, Ian King brings you with experts’ insights into the UK’s major business stories and the key figures that make up news. You don’t want to escape other important developments in the UK, as well as the preview of essential events ready to make waves. Like you see? You can subscribe to Here.
For more than 30 years in financial journalism, on Tuesday April 22, 2008, Royal Bank of Scotland – one of the world’s largest banks – announced that he would tap the billion to 12 billion.
At the time, it was a record of the rights issue of a European company and the UK Bank’s disaster was acquired by Dutch borrower ABN Amro’s previous autumn.
The agreement was supposed to be a crown glory of Fred Goodwin, RBS Chief Executive, former Accountant, for the past eight years, in the early eight years, the National Westminster Bank (Natwest) was established as the largest name in the sector.
As the deputy of CEO George Mathewson, Goodwin has earned a nickname “Fred the Sdrave” for the prowess for cutting his cost. He is not a shrinking purple; In 2001, when he rejected shareholders’ criticism of the executive bonus of the year, he did not win the notoriety, saying, “He does not win the power at the Soho Wine Bar.”
That confidence ran right through the RBS. In March 2001, just a year after Natwest’s acquisition was completed, Goodwin – usually in the Laconic statement – said that I was thinking of “mercy killings” of other UK banks.
Those killings have never been implemented, but in the next six years, RBs have been four times more in size, including the Churchill and Direct Line of the UK insurers, including the US Lender Charter One (the then eye. 5.5 billion). Dineschard Dineschard, Car distributor Dinesshard, Car distributor Dikkan Motors magazine.
By the time ABN Amro launched a bid in April 2007, Trumpers have previously agreed with Barclays, Goodwin was the top dog in the UK banking.
In April 2008, all of them dramatic the problem of rights. The press conference was hastily called at the RBS’s Old London headquarters in the afternoon. .
In 2006, a career -president of the RBS, Tom McKillop, was awarded me at the presentation center on the ground floor of the building with Peter Thal Larsen, the banking editor of the Financial Times, and invited Goodwin to present Goodwin to his presentation.
We are accustomed to a super-confidential person.
I whispered to Peter, “he is mounting scaffold as a person he condemned.”
At a press conference, he had to postpone questions about whether McCillop Goodwin was being dismissed, and the board pushed back the suggestions that they were not challenged by their CEO.
“There is no one person’s responsibility for these events, and looking for a sacrificial lamb avoids the whole thing,” McCillop said.
I wrote in my diary that night: “Mekilop came closer to losing it a couple of times, especially when the board was burned in the combination. Fred Goodwin was punished but composed.”
It’s not an investment – it’s a rescue
At the end of last week, the UK government finally flooded the rest of the shares at Natwest (as the RBS was re -invested in July 2020).
By the time the RBS received its money in 2008, its share price had fallen in a quarter, which was rather than stored in terms of rights.
On October 7, 2008, as corporate customers were rushing to withdraw their money, McKillop had to ask the then Chancellor Alistair Darling for Bale Out, which eventually cost Goodwin’s work.
As well as well recorded, Garden Brown’s government gained control of the bank, pumping it to 5 45.5 billion in 2008 and 2009. Over the years, the government recovered about 35 billion through fees, dividends and share sales, crystallized at around .5 10.5 billion disposal.
That figure naturally appeared in the UK media broadcast.
However, the greater definition has been overlooked that the government has decided that it will be lost on shareholders a decade ago, and it should never be an investment to make a positive benefit to taxpayers – a rescue.
A commentator suggested that the RBS/Natwest should be allowed to fail, argued, “We could definitely do something more productive with all the money tied up in Natwest for the past 17 years, but rather the bank’s failure ignored the impact of the disaster. During the rescue, the Balance sheet of the RBS is larger than the entire UK economy.
UK taxpayers have lost 10.5 billion over a period of 17 years. But during this period, the RBS/Natwest Direct Line and its US banking business, including citizens, are obliged to be offered as its bail terms (the UK, at the time, was subject to the state aid rules of the European Commission).
At the command of Europe under the brand of Williams and Glyn, most of the money was wasted by trying to carve a separate retail bank in the name of increasing the competition again.
In August 2010, US private equity companies forcibly sold Payments Processing Business for Payments Processing for only 3 billion to the US private equity companies, Bain Capital and Advent International. The business was later floated on the London Stock Exchange, then took privately to the US Fintech Institute Fis in March 2019 – Billion 43 billion over the UK government’s Billion 43 billion – a big loss worth Rs.
If the UK was not committed to the state aid rules of the European Commission, the destruction of value would have been very low.
A couple of things are probably more important than any loss caused by the taxpayer.
The first is to learn the lessons of the RBS collapse. Many people who are now working in senior posts in UK financial services were in school or college at the time of Bale Out, but the institutional memory of the event is exceptionally strong, not the least among the UK regulators.
The main reason for the failure of the RBS is, at the time the Habristic ABN Amro’s acquisition and the Prosivicical UK was exacerbated by the financial rules, as it was too much control. Control of post -financial crisis is aimed at reducing the Procyclisti and banks are obliged to increase their capital buffers.
Second, under Goodwin’s heirs-Stephen Hester, Ross McWon, Alison Rose and Paul Thwite-RBS/Natwest have been remodeled as an economically visual argument and a more profitable borrower, better in the coming years to contribute to the UK growth, in particular, to its strong position in business banking.
In the coming years it is likely to hand over the greater profits that throw it to shareholders in the form of a dividend and share the purchase-ben.
On that basis, some people celebrate the fact that the government has dragged a way by removing itself from the Natwest’s shareholders’ register, others question why, exactly, it cannot hold its shareholders for a while.
It is interesting to hear what readers think.
– Ian King
