16 October 2011
A one-hour documentary on which I’ve been working, RBS: Inside the Bank That Ran Out of Money airs on BBC One Scotland tomorrow. The film should be networked across the UK before the end of this year.
The investigative documentary charts the rise and fall of Royal Bank of Scotland, starting with its £21bn takeover of NatWest in February 2000, and ending with its ignominious collapse in October 2008. At the time of its failure, just a year after its catastrophic €71bn takeover of ABN Amro, RBS was the costliest bank in the world to bail-out, requiring a total capital injection of £45.5 billion from the British taxpayer.
The film includes never-before-seen footage of former RBS chief executive, Sir Fred Goodwin, the man who led the bank to its doom, publicly apologising to shareholders. Speaking in the Assembly Hall of the Church of Scotland on November 20th, 2008 Goodwin said: “There can be no question other than that I am extremely sorry”
There is also footage of Sir Fred and his co-director Johnny Cameron insisting the bank was not involved in subprime lending (a claim that was subsequently revealed to have been a lie, as was RBS’s claim when seeking to raise £12bn of additional capital from investors in April 2008 that it had sufficient working capital to survive for another 12 months). RBS: Inside the Bank That Ran Out of Money is based around a series of in-depth interviews with former bank insiders — thus successfully breaking the “omerta” that until now has surrounded its collapse.
People interviewed on camera include RBS’s former chairman and chief executive Sir George Mathewson, former chairman of retail banking Gordon Pell, former chairman and chief executive of corporate and investment banking Iain Robertson, former chief executive of wealth management Cameron McPhail, former non-executive director Cameron McLatchie, former group chief economist Jeremy Peat, and former group head of media relations David Appleton.
One of the more telling quotes used in the film comes from Appleton, who said: “Fred had a very impressive intellect but he used that to bully those around him … people were intimidated from speaking their own mind because they feared Fred’s reaction and this created an atmosphere around him that inhibited even the most senior people in the bank [from] expressing their views
This encapsulates the internal reasons for the bank’s collapse. Fred’s so-called “reign of terror” meant not only that he surrounded himself with “yes” men who rarely challenged his insane desire for growth; it also meant that his lieutenants were tempted to “push the envelope” in order to ensure that stretching targets were met and flatter their own bonuses.
(Admittedly there were plenty of other factors were at play in the near-collapse of RBS — not all of which are covered by the film. These include the deeply-flawed Basel II regulatory framework, which dangerously skewed banks’ behaviour, and a political and regulatory class, led by the ex-chancellor Gordon Brown and his principal economic adviser Ed Balls, who cheered on – and relaxed the rules for – megalomanical bank chiefs like Goodwin, oblivious to the risks they were storing up for future generations).
There are a host of other players one could also blame including institutional investors who could have done more to rein the bank in, auditors Deloitte (who rumours suggest were “bullied” into signing off the bank’s December 2007 accounts), rating agencies who gave what were in fact highly toxic CDOs triple-A ratings, etc.
In the end of the day, however, there was one guy at the helm at the time the bank was driven at full steam into the iceberg.
The film will be broadcast on BBC One Scotland at 9pm on Monday October 17th. If you’re not in Scotland, BBC One Scotland is available on Sky Channel 971, Freesat Channel 960 or Virgin Media Channel 862. You can also watch the programme on BBC iPlayer. The film will be broadcast UK-wide at 9pm on BBC2 on Monday, December 5th.