A lament for the losses on Royal Bank of Scotland

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During more than 30 years in the financial press, few memories are stronger than those on Tuesday, April 22, 2008, on the day that Royal Bank of Scotland – one of the largest banks in the world – announced that she was using shareholders at 12 billion pounds ($ 16 billion).

The amount, at the time, was a record of the issue of rights by a European company and followed the acquisition of the British Bank, in the previous fall, for the Dutch lender ABN Amro.

This deal was supposed to be the glory of the Toyji of Farid Godwin, CEO of RBS, a former accountant, over the past eight years, established himself as the largest of the sector after RBS seized Westminster National Bank (NatWest) in early 2000.

As CEO George Mattheon, Godwin won the title “Farid The Surd” because of his ingenuity to reduce costs. In violet was not shrinking. Matthewson was not the same, who received a bad reputation in 2001 when he ignored shareholders ’criticism of this year’s executive rewards by saying,” They will not win the archaeological authority in the Soho Nebu. “

That confidence ran directly through RBS. In March 2001, barely a year after the acquisition of NatWest, Godwin – usually told me that he is usually thinking about “mercy killings” for other banks in the UK.

The killings have never passed, however, in the next six years, RBS was quadruple in size because it carried out a series of acquisitions including UK insurance companies and supervised direct lines, and the US loan charter (in favor of ante-eyedternn magazine.

By the time the ABN Amro show was launched in April 2007, he surpassed a deal that the latter agreed with Barclays, Godwin was the best dog in banking in the United Kingdom.

All this made this issue the rights in April 2008 very exciting. A hurry press conference was held in the middle of the day at the RBS headquarters in the old London. (The global main office, which was opened in 2005, was a huge campus in Gogarburn, on the outskirts of Edinburgh, was built at a cost of 350 million pounds at a site previously occupied by a psychiatric hospital and is called “Fred’s Folly” by the two assemblies).

I took my place at the presentation center on the ground floor of the building alongside Peter Tall Larsen, Banking Editor at the Financial Times, as Tom McLelb, the career pharmacist who left Mattion as RBS president in 2006, thanked him for his arrival and called on Godwin to make his offer.

The high -confident number we are used to.

“It looks like a convicted man rising,” whispered to Peter.

During the press conference, MCKILOP had to ask questions about whether Godwin would be rejected, which led to the reversal of suggestions that the council was “Patsies” who did not unite enough from the CEO.

“There is no single individual responsible for these events, and the search for a fierce sheep that only lacks the entire point.”

I wrote in my memoirs that night: “Mckillop is close to losing several times, especially when he was roasted about the composition of the painting.

This was not an investment – it was a rescue

The memories of that day came back, at the end of last week, the UK government recently sold its remaining shareholders in Natwitist (where RBS was reformulated in July 2020).

By the time RBS got his money in 2008, the price of his share decreased in a quarter, giving its market value more than it raised the issuance of rights.

On October 7, 2008, with the Corporate customers hurry to withdraw their money, MCKILOP was forced to question Alistair Darling, the then advisor, about a rescue plan that finally cost his job.

As was well documented, the Gordon Brown government took control of the bank, pumped at 45.5 billion pounds in 2008 and 2009 to obtain a share of approximately 85 %. Over the years, the government has regained about 35 billion pounds through fees, distributions and stock sales, which led to a loss to get rid of about 10.5 billion pounds.

This number, of course, has appeared significantly in the coverage of the media in the United Kingdom.

However, many comments have ignored that the government was more than a decade ago that the contribution would be lost, as well as the fact that this was not supposed to be an investment that generates a positive return for taxpayers – it was a rescue process.

He even suggested that a commentator allow RBS/NatWest to fail, on the pretext that “we could definitely do something more productive with all the money that has been linked in Natoyst over the past 17 years,” instead of being overlooking the catastrophic impact that had had the bank’s failure. At the time of rescue, the public budget for RBS was greater than the entire UK economy.

The UK’s taxpayer has lost 10.5 billion pounds over 17 years, of course, frustrated. But the fact that during the period, RBS/NatWest was obligated to empty a number of valuable assets, including the direct line and citizens of its American banking business, such as its rescue conditions (the United Kingdom was, at the time, according to the rules of government aid to the European Commission).

A lot of money was wasted in an attempt to get a separate retail bank that was supposed to be delivered in the name of competition enhancement, again at the request of Europe, under the brand that was extracted Williams & Glenn.

It was sad that the forced sale of WorldPay, a payment processing company, for American private stock companies, Bain Capital and Advent International for only $ 3 billion in August 2010. The business was later on the stocks in London, after which he still has privacy in March 2019 in March.

It is difficult to avoid the conclusion that the UK was not bound by the rules of government aid to the European Commission, as today, the destruction of the value was much lower.

There may be two more important things, longer in the long run, than any loss of taxpayers.

The first is that the lessons of RBS collapse have learned correctly. Many people who are now working in high financial services in the UK were still at school or college at the time of rescue, but the institutional memory of the event is still very strong, not the least among the UK organizers.

The main reason RBS failed, exacerbated by the strange acquisition of ABN Amro and the UK’s financial regulations at the time, was because it was excessive. The post -financial list of crisis aims to reduce procycliclichipity and banks are obligated to increase the capital of capitalism.

The second is that, under the successors of Godwin-Stephen Hyster, Ross Macan, Alison Rose and Paul Thaweet-RBS/NatWest has been reshaped to a worrying and very profitable lender in a good position to contribute to growth in the United Kingdom in the coming years, in particular, to its strong position in commercial banking services.

It is possible that many profits that he achieves in the coming years will be delivered to shareholders in the form of stock profits and stock purchases.

On this basis, although some will celebrate the fact that the government has drawn by the government that removes itself from the shareholders’ record in Natwitist, others would wonder exactly the reason, it could not hold its shareholders for a little longer.

It will be interesting to hear what readers think.

Ian King