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Daily Mail
19 hours ago
- Business
- Daily Mail
RUTH SUNDERLAND: Financial crisis of 2008 still haunts us
The return of NatWest, the bank formerly known as RBS, to the private sector, has more symbolic than practical significance. The sale of the final remnant will not have much impact in the real world of customers, staff and the banking industry more widely. Even so, the final exit of the long-suffering British taxpayer after 17 years – and at a hefty £10billion loss – is a good moment for reflection. Paul Thwaite, the current chief executive, was a relatively junior figure 17 years ago, when the bank came close to going under and taking the entire UK financial system with it. Along with other executives of his generation who began their careers back then, his mindset has been formed by that traumatic experience. Banks, and bankers, are different beasts now. The light touch regulation of the pre-crisis era has been replaced by rules that arguably are too restrictive. There is little trace of the arrogance of former RBS boss Fred Goodwin, Adam Applegarth at Northern Rock and their Wall Street counterparts in the bank CEOs of today. They are considerably more boring – in a good way. The political backdrop is also very different now, though sadly, not necessarily in such a good way. One can trace a line directly from the crisis to the rise of populist leaders on the Left and Right. Disaffection, mistrust and contempt for institutions have become an ingrained feature of the political landscape and this has culminated in the re-election of Donald Trump. In the years running up to 2008, the belief was that capitalism had triumphed over communism with the fall of the Iron and the Bamboo curtains. Globalisation – the free flow of money, trade and people – seemed to be lifting millions of people out of abject poverty. Some communities, including in the rust belt of the US where Trump has won over voters, were being left behind. Cheap credit, including sub-prime mortgages, appeared to be papering over a lot of those cracks. The events of 2008 damaged confidence in experts of all sorts, in elected officials, regulators and institutions. One can draw a line from the debt disasters that hit European nations, including Greece, Spain, Italy and Ireland, to the Brexit referendum. Back in the day, US presidents George W Bush and Barack Obama were at least trying to stabilise the situation rather than throwing petrol on the flames. In the UK, Gordon Brown, a man who may well be judged far more kindly by history than he was at the time, hosted the G20 summit in London in 2009. Many view this gathering, where world leaders pledged to improve financial regulation and to make more than $1trillion available to support the global economy, as a turning point. Central banks flooded economies with emergency cash through Quantitative Easing to keep the system afloat – a necessary measure at the time, though it went on far too long. Wall Street titan Jamie Dimon, then as now the chief executive of JP Morgan, provided a cool head and calm leadership. Dimon, still a towering figure, has been warning Trump about his tariff plans and confrontational foreign agenda. Unfortunately, Trump looks more likely to be the cause of the next crisis than its solution. At the time of the crisis, there were fears the global financial system would implode. That apocalyptic scenario was avoided, but we are still living with the consequences of 2008. Trump is one of them.
Daily Mail
a day ago
- Business
- Daily Mail
I had a ringside seat as arrogant men nearly destroyed a great British bank. That dramatic tale offers a dire warning today: RUTH SUNDERLAND
One Saturday just before Christmas 2007, there was a knock at the Edinburgh home of the late Alistair Darling, who was then Chancellor of the Exchequer in Gordon Brown's Labour Government. On the doorstep, proffering a gift-wrapped panettone, was Fred Goodwin, the boss of Royal Bank of Scotland (RBS), who lived nearby. This was no social call: Goodwin had come to beg for help to keep his bank afloat. His visit was Darling's first foreboding of the catastrophe that would engulf RBS a few months later, culminating in a £45 billion taxpayer bailout.
Yahoo
a day ago
- Business
- Yahoo
Hubris, crisis and scandal: how the NatWest ‘soap opera' unfolded
Hours before the government fired the starting gun on what became a £45bn bailout of Royal Bank of Scotland (RBS) in October 2008, Whitehall was in chaos. Dozens of City bankers, drafted in to support the chancellor, Alistair Darling, were camped along the Treasury building's winding corridors, juggling laptops and mobile phones as they worked to keep the UK's financial system afloat. 'It looked a little bit like an under-stress NHS hospital,' Charles Randell, the government's former legal adviser, recalls. And time was running out. The Labour government, then led by Gordon Brown, had begrudgingly nationalised Northern Rock a year earlier and watched in horror months later as a string of US banks, including Lehman Brothers, went under. RBS bosses including its chair, Tom McKillop, had been summoned to Downing Street and were told that the government would be taking majority ownership in what was then the world's largest lender. There was initial disbelief and then acceptance that their charming but ruthless chief executive, Fred 'the Shred' Goodwin, would have to go. Ministers worked fast over the weekend, knowing there would be consequences if they failed to finalise the bailout by Monday morning. Some even feared that customers, queueing to take out their cash, could turn violent. 'Who knows whether it would have been necessary to bring the army,' says Randell. 'None of that was unimaginable.' At 7am on Monday 13 October, Brown unveiled an 'unprecedented but essential' bailout plan, pumping billions into RBS, as well as into Lloyds, which had recently taken over HBOS, to prevent a financial meltdown. Two subsequent financial injections eventually left the taxpayer with an 84% stake in RBS. 'I recall telling Alistair Darling it could take us 20 years to get the state out of RBS,' says John Kingman, who was then one of the most senior civil servants in the Treasury. He was not far off. It has taken nearly 17 years for the lender – now known as NatWest Group – to fully return to private hands. The government confirmed on Friday that it had sold the state's final shares in the lender, albeit at a £10.5bn loss to the taxpayer. RBS's near-collapse followed a series of acquisitions under Goodwin that had fuelled its rapid international expansion. He followed a £21bn deal to buy NatWest in 2000 with agreements to buy the British insurer Churchill from Credit Suisse, the German credit card business of Santander, and Ireland's First Active, as well as a string of small US banks. The hubris continued, with Goodwin spending £350m to build a lavish campus on the 45-hectare plot of a former psychiatric facility at Gogarburn on the edge of Edinburgh. It included a hairdresser, GP, fitness centre, staff canteen and the CEO's own plush offices, replete with expensive art and gold carpets. In 2007 Goodwin made his largest, and most disastrous, purchase yet, leading a consortium to buy the Dutch bank ABN Amro for £49bn. It was then the biggest deal in financial services history, and for a short period made RBS the biggest bank in the world. With £2.2tn in assets, the group was more than double the size of the UK economy. But the seeds of the financial crisis had taken root. By the autumn, Northern Rock was nationalised, having suffered the first run on a British bank for 150 years. And within a year of the ABN Amro deal, RBS started to wobble. Shareholders were asked to pump in £12bn of new capital after bosses unveiled £5.9bn of credit crunch write-downs. Goodwin also put the insurance businesses, which include Churchill and Direct Line, up for sale. In August 2008, RBS reported its first loss in 40 years, and Lehman Brothers' devastating collapse a month later unleashed a wave of market turmoil. By October, RBS was nationalised, Goodwin was ousted, and the former Abbey National executive Stephen Hester was parachuted in to run the bailed-out bank. In 2011 a report from the Financial Services Authority (FSA) partly blamed the RBS failure on 'light touch' regulation that had allowed it to rely on risky, short-term funding and pursue deals that left it with an inadequate financial cushion. The report also cited 'deficiencies in RBS management, governance and culture which made it prone to make poor decisions'. Goodwin was accused of being slow to say sorry and proceeded to dig his heels in over the £16m pension package – worth £700,000 a year – he received despite being sacked. As outrage built over what was seen as a reward for failure, he eventually gave up more than £200,000 of annual retirement pay and issued a 'profound and unqualified apology for all the distress caused'. He was never formally disciplined for the bank's failures and his inflation-linked payouts have since crept back up to nearly £600,000 a year. But Goodwin's reputation was left in tatters, having been stripped of his knighthood in 2012 amid concerns that he had 'had brought the honours system in to disrepute'. Within months of being installed at RBS, Goodwin's successor announced a radical restructuring plan after reporting the biggest loss in British corporate history, at more than £24bn. Hester would end up cutting more than 39,000 jobs and slashing the size of the bank's balance sheet by £1tn. The banker later said it felt like 'defusing a ticking timebomb'. But Hester sparked controversies of his own. First he butted heads with ministers over pay, having begrudgingly agreed to waive his bonus every year except 2010. Hester said he considered resigning in 2012 when he lost out on £1m due to public pressure. Then, in 2013, scandal returned when the bank was fined £390m for rigging the Libor interest rate, with some of the wrongdoing having taken place on Hester's watch. After five years overseeing what he called an RBS 'soap opera', Hester was forced out. Despite sweeping cuts, he had not shrunk the investment bank as deeply as the then coalition government would have liked, and only managed to take the bank out of 12 of the 50 countries in which Goodwin had planted the RBS flag. He was replaced by the New Zealand banker Ross McEwan, with Howard Davies, the former head of the recently axed FSA, installed as chair. Together they were tasked with exiting another 25 countries and slashing the investment bank. In an attempt to head off further pay rows, George Osborne, then chancellor, scrapped executive bonuses at the bank under a directive that lasted until 2022. He expected cultural change to naturally follow. The goal? To get the group on a stable enough footing, centred on a solid, domestic retail bank, that allowed the government to start selling its shares. McEwan, versed in retail banking, drove the domestic strategy, while Davies tells the Guardian he focused 'trying to sort out the sins of the past in order to put the bank in a position where it was saleable'. That included RBS's role in the US sub-prime mortgage crisis, money laundering allegations, and a scandal involving its defunct Global Restructuring Group (GRG), which was accused of pushing small- and medium-sized businesses into failure and stripping them of their assets. The bank eventually reached a $5.5bn settlement with US regulators in 2017 for mis-selling toxic mortgages. In 2019 it effectively emerged unscathed over the GRG scandal, despite the regulator having found 'systemic and widespread' mistreatment of customers. Two years into the McEwan-Davies era, Osborne kicked off the government's privatisation plan, selling the first tranche of state shares. Davies says the bank did its best to stay the course: 'The bank had had such a formative near-death experience that people had become very conscious that we were not [going to risk] getting into new regulatory issues.' That included axing its motor finance business, a move that proved fortuitous given rival banks such as Lloyds are now embroiled in a car loan commissions scandal. 'We probably left some money on the table by not being in that business … but it was a difficult business to be compliant in, so we basically were out of it,' Davies says. There was also the matter of sticking to EU state aid rules, which required RBS to sell a portion of the business to ensure it was not getting too much of a leg-up compared to peers. It carved out but failed to sell 315 branches under a resurrected Williams & Glyn's brand. An alternative deal with EU regulators eventually led to it closing a swathe of branches and funding a £750m scheme to encourage business customers into the arms of challenger banks and fintechs. The move drew a line under the bailout terms, just as RBS reported its first annual profit in 2018. With that came dividends – including to its largest shareholder, the UK government. 'We desperately wanted to be a normal bank, and we were at last able to make decent returns,' Davies says. 'And it was a vindication of pulling back and pulling down a lot of the parts of the bank that were weighing [us] down.' Davies initially thought the bank would return to private hands by 2020, but the US mortgages fine and Covid crisis put those hopes on ice. Shares fell below 100p during the pandemic, making it hard for the government – which had paid around 500p a share during the bailout – to justify selling at such a discount. By that time, McEwan had stepped down, handing the reins to the longtime NatWest staffer Alison Rose in 2019. The first female CEO of a FTSE-listed bank, she became a City darling, championing diversity and driving cultural change at a lender by then synonymous with scandal. Rose wasted no time making sweeping changes, including a switching the toxic RBS name three months into her tenure to NatWest – Goodwin's first acquisition target. She also took advantage of strong finances to launch billion-pound buybacks of government shares, accelerating the privatisation. After a decade of turmoil, Rose was not only palatable but upheld as a City leader. She was being tapped to lead a state inquiry in female-led business that bore her name, co-chaired a UK energy efficiency taskforce, and sat on the prime minister Rishi Sunak's business council. She was even made a dame in the 2023 new year honours list for helping to restore NatWest to stability and profitability. Then came the controversy and the eventual fall from grace. In summer 2023, it emerged that Coutts, NatWest's private bank for the ultra-wealthy, planned to shut Nigel Farage's bank accounts, sparking fury from the now-MP and Reform UK leader. Farage obtained internal documents showing that the bank had concerns over his political views and launched a campaign centred on what he posed as unfair discrimination by the state-owned bank. The scandal escalated further when it emerged that Rose had discussed Farage's case with a BBC journalist. The Tory government capitulated to media pressure, and in a stark departure from the government's hands-off approach, forced Rose to step down, against the wishes of the NatWest board. A private bank, with no state-owned shares, would have been treated differently, Davies says. And Rose might still have the job. 'I think if they hadn't owned the shares, I hope and expect that chancellor would have said 'nothing to do with us'. So, yes, I think it was totally, totally significant.' A subsequent investigation by an external law firm found no evidence backing Farage's accusations that NatWest was debanking customers based on their political views. But Rose had already been replaced by NatWest's business banking boss Paul Thwaite – a man seen as 'calm and unflappable' by a board members keen for some quiet after another tumultuous period in the political crosshairs. By 2024, Davies, too, was replaced, by the former Network Rail and Mastercard chair Rick Haythornthwaite. The pair are now ushering in a new era for the lender, but at a massive cost to the public. The government has only recouped about £35bn of the more than £45bn it spent rescuing the lender, with the bulk of the government's shares having been sold below the 502p at which they were bought. Shares have only recently surged above that price, leaving the taxpayer with a £10.5bn loss. Haythornthwaite said last month the bank was indebted to the public for keeping the lender afloat. And while Thwaite said he is 'absolutely ambitious for the bank' as it returns to private ownership, he insisted bosses are not going to repeat the mistakes of the past. For now, that could mean running a much more 'boring' bank. 'If boring means being thoughtful about risk versus reward, and driving better returns for shareholders, then I'm absolutely comfortable with that.' Inicia sesión para acceder a tu cartera de valores
The Guardian
2 days ago
- Business
- The Guardian
Hubris, crisis and scandal: how the NatWest ‘soap opera' unfolded
Hours before the government fired the starting gun on what became a £45bn bailout of Royal Bank of Scotland (RBS) in October 2008, Whitehall was in chaos. Dozens of City bankers, drafted in to support the chancellor, Alistair Darling, were camped along the Treasury building's winding corridors, juggling laptops and mobile phones as they worked to keep the UK's financial system afloat. 'It looked a little bit like an under-stress NHS hospital,' Charles Randell, the government's former legal adviser, recalls. And time was running out. The Labour government, then led by Gordon Brown, had begrudgingly nationalised Northern Rock a year earlier and watched in horror months later as a string of US banks, including Lehman Brothers, went under. RBS bosses including its chair, Tom McKillop, had been summoned to Downing Street and were told that the government would be taking majority ownership in what was then the world's largest lender. There was initial disbelief and then acceptance that their charming but ruthless chief executive, Fred 'the Shred' Goodwin, would have to go. Ministers worked fast over the weekend, knowing there would be consequences if they failed to finalise the bailout by Monday morning. Some even feared that customers, queueing to take out their cash, could turn violent. 'Who knows whether it would have been necessary to bring the army,' says Randell. 'None of that was unimaginable.' At 7am on Monday 13 October, Brown unveiled an 'unprecedented but essential' bailout plan, pumping billions into RBS, as well as into Lloyds, which had recently taken over HBOS, to prevent a financial meltdown. Two subsequent financial injections eventually left the taxpayer with an 84% stake in RBS. 'I recall telling Alistair Darling it could take us 20 years to get the state out of RBS,' says John Kingman, who was then one of the most senior civil servants in the Treasury. He was not far off. It has taken nearly 17 years for the lender – now known as NatWest Group – to fully return to private hands. The government confirmed on Friday that it had sold the state's final shares in the lender, albeit at a £10.5bn loss to the taxpayer. RBS's near-collapse followed a series of acquisitions under Goodwin that had fuelled its rapid international expansion. He followed a £21bn deal to buy NatWest in 2000 with agreements to buy the British insurer Churchill from Credit Suisse, the German credit card business of Santander, and Ireland's First Active, as well as a string of small US banks. The hubris continued, with Goodwin spending £350m to build a lavish campus on the 45-hectare plot of a former psychiatric facility at Gogarburn on the edge of Edinburgh. It included a hairdresser, GP, fitness centre, staff canteen and the CEO's own plush offices, replete with expensive art and gold carpets. In 2007 Goodwin made his largest, and most disastrous, purchase yet, leading a consortium to buy the Dutch bank ABN Amro for £49bn. It was then the biggest deal in financial services history, and for a short period made RBS the biggest bank in the world. With £2.2tn in assets, the group was more than double the size of the UK economy. But the seeds of the financial crisis had taken root. By the autumn, Northern Rock was nationalised, having suffered the first run on a British bank for 150 years. And within a year of the ABN Amro deal, RBS started to wobble. Shareholders were asked to pump in £12bn of new capital after bosses unveiled £5.9bn of credit crunch write-downs. Goodwin also put the insurance businesses, which include Churchill and Direct Line, up for sale. In August 2008, RBS reported its first loss in 40 years, and Lehman Brothers' devastating collapse a month later unleashed a wave of market turmoil. By October, RBS was nationalised, Goodwin was ousted, and the former Abbey National executive Stephen Hester was parachuted in to run the bailed-out bank. In 2011 a report from the Financial Services Authority (FSA) partly blamed the RBS failure on 'light touch' regulation that had allowed it to rely on risky, short-term funding and pursue deals that left it with an inadequate financial cushion. The report also cited 'deficiencies in RBS management, governance and culture which made it prone to make poor decisions'. Goodwin was accused of being slow to say sorry and proceeded to dig his heels in over the £16m pension package – worth £700,000 a year – he received despite being sacked. As outrage built over what was seen as a reward for failure, he eventually gave up more than £200,000 of annual retirement pay and issued a 'profound and unqualified apology for all the distress caused'. He was never formally disciplined for the bank's failures and his inflation-linked payouts have since crept back up to nearly £600,000 a year. But Goodwin's reputation was left in tatters, having been stripped of his knighthood in 2012 amid concerns that he had 'had brought the honours system in to disrepute'. Within months of being installed at RBS, Goodwin's successor announced a radical restructuring plan after reporting the biggest loss in British corporate history, at more than £24bn. Hester would end up cutting more than 39,000 jobs and slashing the size of the bank's balance sheet by £1tn. The banker later said it felt like 'defusing a ticking timebomb'. But Hester sparked controversies of his own. First he butted heads with ministers over pay, having begrudgingly agreed to waive his bonus every year except 2010. Hester said he considered resigning in 2012 when he lost out on £1m due to public pressure. Then, in 2013, scandal returned when the bank was fined £390m for rigging the Libor interest rate, with some of the wrongdoing having taken place on Hester's watch. After five years overseeing what he called an RBS 'soap opera', Hester was forced out. Despite sweeping cuts, he had not shrunk the investment bank as deeply as the then coalition government would have liked, and only managed to take the bank out of 12 of the 50 countries in which Goodwin had planted the RBS flag. He was replaced by the New Zealand banker Ross McEwan, with Howard Davies, the former head of the recently axed FSA, installed as chair. Together they were tasked with exiting another 25 countries and slashing the investment bank. In an attempt to head off further pay rows, George Osborne, then chancellor, scrapped executive bonuses at the bank under a directive that lasted until 2022. He expected cultural change to naturally follow. The goal? To get the group on a stable enough footing, centred on a solid, domestic retail bank, that allowed the government to start selling its shares. McEwan, versed in retail banking, drove the domestic strategy, while Davies tells the Guardian he focused 'trying to sort out the sins of the past in order to put the bank in a position where it was saleable'. That included RBS's role in the US sub-prime mortgage crisis, money laundering allegations, and a scandal involving its defunct Global Restructuring Group (GRG), which was accused of pushing small- and medium-sized businesses into failure and stripping them of their assets. The bank eventually reached a $5.5bn settlement with US regulators in 2017 for mis-selling toxic mortgages. In 2019 it effectively emerged unscathed over the GRG scandal, despite the regulator having found 'systemic and widespread' mistreatment of customers. Two years into the McEwan-Davies era, Osborne kicked off the government's privatisation plan, selling the first tranche of state shares. Davies says the bank did its best to stay the course: 'The bank had had such a formative near-death experience that people had become very conscious that we were not [going to risk] getting into new regulatory issues.' That included axing its motor finance business, a move that proved fortuitous given rival banks such as Lloyds are now embroiled in a car loan commissions scandal. 'We probably left some money on the table by not being in that business … but it was a difficult business to be compliant in, so we basically were out of it,' Davies says. There was also the matter of sticking to EU state aid rules, which required RBS to sell a portion of the business to ensure it was not getting too much of a leg-up compared to peers. It carved out but failed to sell 315 branches under a resurrected Williams & Glyn's brand. An alternative deal with EU regulators eventually led to it closing a swathe of branches and funding a £750m scheme to encourage business customers into the arms of challenger banks and fintechs. The move drew a line under the bailout terms, just as RBS reported its first annual profit in 2018. With that came dividends – including to its largest shareholder, the UK government. 'We desperately wanted to be a normal bank, and we were at last able to make decent returns,' Davies says. 'And it was a vindication of pulling back and pulling down a lot of the parts of the bank that were weighing [us] down.' Davies initially thought the bank would return to private hands by 2020, but the US mortgages fine and Covid crisis put those hopes on ice. Shares fell below 100p during the pandemic, making it hard for the government – which had paid around 500p a share during the bailout – to justify selling at such a discount. By that time, McEwan had stepped down, handing the reins to the longtime NatWest staffer Alison Rose in 2019. The first female CEO of a FTSE-listed bank, she became a City darling, championing diversity and driving cultural change at a lender by then synonymous with scandal. Rose wasted no time making sweeping changes, including a switching the toxic RBS name three months into her tenure to NatWest – Goodwin's first acquisition target. She also took advantage of strong finances to launch billion-pound buybacks of government shares, accelerating the privatisation. After a decade of turmoil, Rose was not only palatable but upheld as a City leader. She was being tapped to lead a state inquiry in female-led business that bore her name, co-chaired a UK energy efficiency taskforce, and sat on the prime minister Rishi Sunak's business council. She was even made a dame in the 2023 new year honours list for helping to restore NatWest to stability and profitability. Then came the controversy and the eventual fall from grace. In summer 2023, it emerged that Coutts, NatWest's private bank for the ultra-wealthy, planned to shut Nigel Farage's bank accounts, sparking fury from the now-MP and Reform UK leader. Farage obtained internal documents showing that the bank had concerns over his political views and launched a campaign centred on what he posed as unfair discrimination by the state-owned bank. The scandal escalated further when it emerged that Rose had discussed Farage's case with a BBC journalist. The Tory government capitulated to media pressure, and in a stark departure from the government's hands-off approach, forced Rose to step down, against the wishes of the NatWest board. A private bank, with no state-owned shares, would have been treated differently, Davies says. And Rose might still have the job. 'I think if they hadn't owned the shares, I hope and expect that chancellor would have said 'nothing to do with us'. So, yes, I think it was totally, totally significant.' A subsequent investigation by an external law firm found no evidence backing Farage's accusations that NatWest was debanking customers based on their political views. But Rose had already been replaced by NatWest's business banking boss Paul Thwaite – a man seen as 'calm and unflappable' by a board members keen for some quiet after another tumultuous period in the political crosshairs. By 2024, Davies, too, was replaced, by the former Network Rail and Mastercard chair Rick Haythornthwaite. The pair are now ushering in a new era for the lender, but at a massive cost to the public. The government has only recouped about £35bn of the more than £45bn it spent rescuing the lender, with the bulk of the government's shares having been sold below the 502p at which they were bought. Shares have only recently surged above that price, leaving the taxpayer with a £10.5bn loss. Haythornthwaite said last month the bank was indebted to the public for keeping the lender afloat. And while Thwaite said he is 'absolutely ambitious for the bank' as it returns to private ownership, he insisted bosses are not going to repeat the mistakes of the past. For now, that could mean running a much more 'boring' bank. 'If boring means being thoughtful about risk versus reward, and driving better returns for shareholders, then I'm absolutely comfortable with that.'
Daily Mail
3 days ago
- Business
- Daily Mail
ALEX BRUMMER: Fred Goodwin's ghost still stalks financial corridors
The final escape of NatWest, the rebranded Royal Bank of Scotland, from government hands is a signal moment. Some 17 fractious years have passed since the Great Financial Crisis when NatWest ATMs came within minutes of drying up, and Gordon Brown's government took effective control with a £45.5billion bailout. All told, UK plc expended almost a trillion pounds in the shape of support measures directly and through the Bank of England to keep the City from imploding. So much time has passed that memory of Fred Goodwin, the architect of RBS's self-destruction, has faded. But not for investors in RBS/NatWest stock. I was among the foolhardy shareholders, along with big battalions such as the old Prudential, who were persuaded by Goodwin to support a £12billion rescue rights issue in the spring of 2008. We believed that Fred was smart enough to pull the bank back from the brink. Goodwin, in a frenzy of macho competitiveness, had outbid Barclays to take control of ABN Amro, a Dutch bank weighed down with sub-prime mortgage securities. What we didn't know was that Goodwin was a chief executive with a megalomania complex. Dissatisfied with two tower blocks on Bishopsgate in the City and a historical HQ on St Andrews Square in Edinburgh, he built himself a glass palace at Gogarburn downwind from a pig farm. Among the quirks was a designer fish kitchen in reach of his office and filing cabinets with rounded tops to prevent papers piling up. Nurturing NatWest back to health has proved a titanic exercise. Valuable subsidiaries such as Worldpay, Direct Line and Citizens in North America were jettisoned and the balance sheet shrunk. Scandal erupted when the bank's Global Restructuring Group (GRG) forced otherwise healthy client companies to the wall. Why did RBS/NatWest stay in government control for so long? In the US, bailed-out banks and the insurer AIG were returned to the public markets swiftly with the federal government taking contemporary losses. Rapid recovery of lending by US financial groups followed, and a speedy return to trend growth as credit and investment returned to normal. The failure of successive British governments to return the banks to the market and over-regulation has left an indelible mark on the UK, where growth has subsided to half the trend rate before the crisis. Banks and insurers were force-fed into holding excess capital and government stock. Credit and loans, the lifeblood of investment and output, were stymied. Excessive caution, designed to prevent a repeat of 2008-09, has proved destructive to expansion for Britain's advanced tech, pharma, creative and defence sectors. Politics explains why the Government held on to the NatWest stake for so long. No politicians, Labour or Tory, wanted blame for losing taxpayer cash. But the Government stake, even as it shrank, affected behaviour. Pay and bonuses were constrained, which meant that NatWest found it difficult to recruit the most talented financiers. Government felt obliged to intervene in what should have been boardroom issues. This was most notable when Alison Rose was defenestrated as chief executive in 2023, after leaking some disobliging comments about Nigel Farage being de-banked at private offshoot Coutts. As NatWest fully returns to public markets, it is worth reflecting that £10billion of taxpayers' money has mysteriously disappeared. That is cash that Chancellor Rachel Reeves desperately needs.
