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CNBC
04-06-2025
- Business
- CNBC
CNBC's UK Exchange newsletter: A lament for the losses on Royal Bank of Scotland
In my more than 30 years in financial journalism, few memories are stronger than those of Tuesday, April 22, 2008, the day Royal Bank of Scotland — then one of the world's biggest banks — announced it was tapping shareholders for £12 billion ($16 billion). The sum was, at the time, a record for a rights issue by a European company and followed the U.K. bank's calamitous acquisition, the previous autumn, of the Dutch lender ABN AMRO. That deal was supposed to have been the crowning glory of Fred Goodwin, the RBS chief executive, a former accountant who, for the previous eight years, had established himself as the sector's biggest name following RBS' takeover of National Westminster Bank (NatWest) in early 2000. As deputy to CEO George Mathewson, Goodwin had earned the nickname "Fred The Shred" for his cost-cutting prowess. He was no shrinking violet; nor was Mathewson himself, who won notoriety in 2001 when he shrugged off shareholder criticism of that year's executive bonuses by saying "they would not win bragging power in a Soho wine bar." That confidence ran right through RBS. In March 2001, barely a year after the NatWest acquisition completed, Goodwin — in a typically laconic remark — told me he was contemplating "mercy killings" of other U.K. banks. Those killings never came to pass but, in the subsequent six years, RBS quadrupled in size as it made a string of acquisitions including of U.K. insurers Churchill and Direct Line, the U.S. lender Charter One (for a then eye-watering $10.5 billion), a 10% stake in Bank of China and, somewhat improbably, the car dealership Dixon Motors in April 2002. That year saw him crowned Businessman of the Year by Forbes magazine. By the time he launched the bid for ABN AMRO in April 2007, trumping a deal the latter had previously agreed with Barclays, Goodwin was top dog in U.K. banking. All of which made that rights issue in April 2008 so dramatic. A press conference was hastily convened for midday at RBS's old London headquarters. (The global head office, opened in 2005, was a gigantic campus at Gogarburn, on the outskirts of Edinburgh, built at a cost of £350 million on a site formerly occupied by a psychiatric hospital and nicknamed "Fred's Folly" by locals). I took my place in the presentation center on the ground floor of the building alongside Peter Thal Larsen, then banking editor of the Financial Times, as Tom McKillop, the career pharmacist who had succeeded Mathewson as RBS chairman in 2006, thanked us for coming and invited Goodwin to make his presentation. Gone was the super-confident figure to whom we had become accustomed. "He looks like a condemned man mounting the scaffold," I whispered to Peter. During the press conference, McKillop had to fend off questions about whether Goodwin would be dismissed, pushing back at suggestions that the board were "patsies" who had not sufficiently challenged their CEO. "There is no single individual responsible for these events, and to look for a sacrificial lamb just misses the whole point," McKillop said. I wrote in my diary that night: "McKillop came close to losing it a couple of times, particularly when grilled on the board composition. Fred Goodwin looked chastened but composed." This wasn't an investment — it was a rescue Memories of that day came flooding back when, at the end of last week, the U.K. government finally sold its remaining shareholding in NatWest (as RBS was rechristened in July 2020). By the time RBS got its money in 2008, its share price had fallen by a quarter, wiping more from its stock market value than it raised in the rights issue. On Oct. 7, 2008, with corporate customers rushing to withdraw their money, McKillop was forced to ask Alistair Darling, the then Chancellor, for a bailout that eventually cost Goodwin his job. As has been well documented, Gordon Brown's government took control of the bank, pumping in £45.5 billion in 2008 and 2009 to acquire a stake that peaked at nearly 85%. Over the years, the government has recouped some £35 billion via fees, dividends and share sales, crystallizing a loss on disposal of nearly £10.5 billion. That figure has, naturally, featured heavily in U.K. media coverage. However, much of the commentary has overlooked that the government concluded more than a decade ago that a loss would be made on the shareholding, as well as the fact that this was never supposed to be an investment generating a positive return for taxpayers — it was a rescue. One commentator even suggested RBS/NatWest should have been allowed to fail, arguing that "we could have surely done something more productive with all the money that was tied up in NatWest for the last 17 years," rather overlooking the catastrophic impact the bank's failure would have had. At the time of the rescue, RBS's balance sheet was bigger than the entire U.K. economy. That the U.K. taxpayer lost £10.5 billion over a 17-year period is, of course, depressing. But it is compounded by the fact that, during the period, RBS/NatWest was obliged to offload a number of valuable assets, including Direct Line and its U.S. banking business Citizens, as conditions of its bail-out (the U.K. was, at the time, subject to the European Commission's state aid rules). Much money was also wasted trying to carve out a separate retail bank which was to have been demerged in the name of enhancing competition, again at the behest of Europe, under the exhumed Williams & Glyn brand. Saddest of all was the forced sale of WorldPay, a payments processing business, to U.S. private equity firms Bain Capital and Advent International for just $3 billion in August 2010. The business was later floated on the London Stock Exchange, later still taken private and then sold in March 2019 to the U.S. fintech firm FIS for $43 billion — a considerably bigger loss of value than anything endured by the U.K. government on its RBS/NatWest shares. It is hard to avoid the conclusion that had the U.K. not been bound by the European Commission's state aid rules, as is the case today, the destruction of value would have been far lower. A couple of things are probably more important, longer term, than any loss incurred by taxpayers. The first is that the lessons from the RBS collapse have been properly learned. Many people now working in senior positions in U.K. financial services were still at school or college at the time of the bailout, but institutional memory of the event remains exceptionally strong, not least among U.K. regulators. The main reason RBS failed, exacerbated by the hubristic ABN AMRO acquisition and the procyclical U.K. financial regulations at the time, was because it was over-leveraged. Post-financial-crisis regulation has aimed at reducing procyclicality and banks have been obliged to increase their capital buffers. The second is that under Goodwin's successors — Stephen Hester, Ross McEwan, Alison Rose and Paul Thwaite — RBS/NatWest has been reshaped into a financially robust and highly profitable lender well-placed to contribute to U.K. growth in coming years thanks, in particular, to its strong position in business banking. Much of the profit it throws off in the coming years is likely to be handed back to shareholders in the form of dividends and share buy-backs. On that basis, while some will celebrate the fact that a line has been drawn by the government removing itself from NatWest's shareholder register, others will question why, exactly, it could not have held onto its shareholding for a little longer. It would be interesting to hear what readers think.'We can't afford not to do this': Former defense secretary talks UK arms spend Former U.K. Defence Secretary Penny Mordaunt tells Silvia Amaro the UK's new defense spend pledge "is not worth the paper it's written on" without the money to accompany it. Jim O'Neil: Donald Trump is undermining the cyclical and structural outlook for the U.S. dollar Jim O'Neil, former U.K. Treasury Minister and former chairman of Goldman Sachs Asset Management, joins CNBC's "Squawk on the Street" to discuss how the U.S. dollar's global dominance may be challenged, whether alternatives to the dollar exist, and more. Who owns London's (privately owned) public spaces? Privately-owned public spaces — or POPS — have transformed cities over the past sixty years. But their ownership is regularly questioned — and with it, their design, accessibility and what they've put on a war footing with defense overhaul — but is it too little, too late? Analysts and economists argue that the U.K.'s new defense spending plans could ultimately prove to be too little, too late — and may be difficult to deliver, given fiscal constraints in the U.K. UK growth to be reined in by public finance squeeze, OECD warns. While the budget deficit is expected to improve from 5.3% in 2025 to 4.5% in 2026, according to OECD forecasts, debt interest spending remains high. Trump's visa ban could be Britain's big break in the race for top Chinese talent. British universities are preparing to attract international Chinese students after President Donald Trump's administration cracked down on visas for Chinese students studying in the U.S.U.K. stocks have kicked off the new month with a whimper rather than a bang, with both the FTSE 100 and FTSE 250 near-flat over the last two sessions. That's more so a reflection of broadly cautious market sentiment than negativity toward U.K. assets, as uncertainty over the global trade outlook continues to muddy the trading waters. Prime Minister Keir Starmer's defense spending plan gave a modest boost to stocks in the sector such as Rolls-Royce, BAE Systems and Babcock, all of which have soared in the year-to-date. Sterling, meanwhile, has seen a solid few sessions despite a dip Tuesday, with the pound back above the $1.35 level. The greenback has become one of the most punished assets on the back of U.S. tariff tensions, which ratcheted up late last week following President Donald Trump's announcement of 50% duties on steel imports.
Epoch Times
22-04-2025
- Sport
- Epoch Times
New Biography Unearths a Grand View of a Baseball Great
This year marks the 100th anniversary of Christy Mathewson's death. The legendary pitcher, who was part of the first class of inductees into the Baseball Hall of Fame, has in a sense been resurrected. Historian and baseball savant, Alan D. Gaff, has again unearthed material from one of the game's greats. Just as he did with his 2020 book, 'Lou Gehrig: The Lost Memoir,' the author has gifted baseball fans with a piece of America's pastime that might well have been lost to history. In his new work, 'Baseball's First Superstar: The Lost Life Story of Christy Mathewson,' Gaff takes the reader through the early 20th century era of baseball when the sportswriters of newspapers and magazines gave the game its mythic status. The folklore of the game had become pronounced by the middle of the century, as Gaff quotes a 1945 article from sportswriter Whitney Martin, stating that sportswriters 'glamorized the game, surrounded it with an aura of romance, personalized and humanized the players, built reputations.' Gaff, by some kind fate, discovered lost material that indeed 'personalized and humanized' Mathewson. Mathewson warming up as a New York Giant in 1910. Library of Congress. Public Domain Most of the articles Gaff presents were written to be the baseball player's biography, and much of that was written by one of the golden boys of the golden era of newspapers, Bozeman Bulger. Although their job was to 'glamorize the game,' a number of sportswriters made such a significant impact on baseball that they themselves became icons in their own right. As the author notes, 'Being a sportswriter prior to the World War meant joining a unique fraternity that assembled at the various watering holes in New York City.' Finding the First Star That unique fraternity helped expand the game across the country and made familiar the names of Honus Wagner, Ty Cobb, Walter Johnson, and Babe Ruth. These other four joined Mathewson to comprise the first class of inductees into the Hall of Fame. These names are probably far more familiar to readers than that of Mathewson. Nonetheless, Gaff utilizes this class to pose and ultimately answer a question: Who was baseball's first superstar. The author's essays about these players makes a great case for each. Gaff, however, qualifies Mathewson, writing that, 'Talent is common but marvelous talent is quite rare. When combined with the character of a true sportsman and gentlemanly behavior, this country takes notice, as it did with Christy Mathewson, who was upheld as a symbol of American sportsmanship.' Undoubtedly, it is Gaff's hope that the country again takes notice of Mathewson. The centerpiece of Gaff's book is Bulger's lost biography on Mathewson, which was serialized in newspapers a century ago. The author does, though, add other articles from that era in order 'to fill in gaps to keep the story flowing.' Among these pieces are articles written by Mathewson himself, as well as a heartrending piece by Mathewson's wife, Jane, shortly after the pitcher lost his battle with tuberculosis. The Best in Baseball and Humanity 'Baseball's First Superstar' presents the best of baseball and its players. It also presents the best in people, a person, in the form of Mathewson. Although it's certainly a baseball book, it's not strictly about that. Gaff's collection of articles written by those who knew the first class hall of famer best is about something more profound than a game. The book is a discussion on friendship, duty, sacrifice, love, and hope against a deadly disease, which he contracted during World War I (a war he did not have to volunteer for). These ideals, in a sense, can be summed up in the final pages of the book in Jane's article. She states, 'Though I had known Christy as only a wife can know her husband for twenty years, I never quite realized his strength of character and his fortitude and his sweet consideration for others until he was stricken ill.' Related Stories 5/21/2024 2/12/2024 Gaff quotes Mathewson's old friend and former manager, John J. McGraw, who wrote a letter to Bulger, stating, 'I do want to say that the annals of sport would not be complete without an official biography of Matty and I think every boy, young man, old man and a great many women will read it.' A century later that statement still rings true. Baseball fans can once more be thankful that Gaff has again sleuthed his way into the lore of America's pastime and presented a player whose name we know, but personage we do not. Just as with his Lou Gehrig work, Gaff has unearthed a trove of baseball treasure with descriptions and stories of Mathewson by those who knew him best. Such an undertaking is a testament to the author's love and appreciation for America's great game. ' By Alan D. Gaff University of Nebraska Press, May 1, 2025 Hardcover: 248 pages What arts and culture topics would you like us to cover? Please email ideas or feedback to
