The slogan that Fred Goodwin chose to
market RBS in the boom years was: “Make It Happen”. The bank he ran certainly
helped make it happen, although not quite in the way that he and his colleagues
intended.
They built Royal Bank of Scotland -
previously a modest, careful institution that was capable of innovation but
sober with it - into the biggest bank in the world. Its balance sheet (total
assets) was £1.9 trillion pounds by the time the financial crisis hit. That was
a sum bigger than the entire output of the UK economy. In under a decade RBS
became a vast international bank, which meant that if it got into severe
difficulties it was going to cost an enormous amount to rescue it. Five years
ago this month, the British taxpayer stumped up £45.2bn and ended up owning 82%
of RBS. Many hundreds of billions of pounds more was needed to rescue the UK's
other banks, and to provide emergency loans so they could still function. But
RBS was the biggest British bank of the lot and it needed the most rescuing.
I became fascinated by what had gone
wrong at the bank Goodwin ran, and so two and half years ago began the research
and writing that produced my book, Making It Happen: Fred Goodwin, RBS and the
men who blew up the British economy.
At its heart is an extraordinary human
story of hubris, pride and ambition unrestrained. But I also wanted to go wider
than Goodwin and his management team at RBS. The causes of the failure were
widespread. The board of RBS, the regulators, auditors, shareholders and
politicians all failed. Indeed, the reckless rise of RBS happened while the
then Chancellor Gordon Brown was proclaiming the end of boom and bust. That
boast set the tone for an era in which bonus-hungry bankers and many consumers
became convinced that it was fine to load up with epic amounts of debt because
those in positions of authority said the good times would not end.
In the autumn of 2008 I watched it all
come crashing down. Then I was an executive on the Telegraph, the paper I still
write for. I was running the comment section of the newspaper and its website,
and on the rota to duty-edit the Sunday for Monday edition of the paper. Each
weekend seemed to bring fresh hitherto unimaginable disaster that portended an
economic catastrophe.
I was duty-editing at The Daily Telegraph
on the Sunday evening in September when it became apparent that Lehman Brothers
was not going to be rescued. It was going bust in the morning.
A few weeks later, on Tuesday the 7th of
October 2008, I stood with colleagues and watched as the RBS share price fell
like a stone, its course charted as a red line sloping steeply downwards on the
large TV screens that peppered the newsroom. The inside story of that day -
involving Goodwin, RBS chairman Sir Tom McKillop, the Chancellor, the Prime
Minister, Britain’s other bank chief executives, the Bank of England and the
team at the Treasury all battling to avert total collapse - is recounted in
Chapter One of Making It Happen.
The following weekend I was on duty, as
the government finalised the rescue of the banking system on the Sunday
evening. The next morning the headlines on page 1 told of an epic rescue that
would cost the taxpayer very dear.
Five years on, I wanted to try and
capture the mad intensity of that period while telling the whole
story as fairly as possible. And I wanted to find out what the hell those
involved thought they were doing in the long run-up to disaster.
