Alex Massie has a long, fascinating riff on the implosion of the Royal Bank of Scotland (RBS)--which, in the Scottish consciousness, is a bit like Enron, Citigroup, and AIG all rolled into one. Key passage:
[RBS CEO] Goodwin was becoming, it seems, obsessed with Barclay's who were emerging, he felt, as RBS's chief competitor. When Barclay's began exploring a merger with ABN-Amro, Goodwin saw an opportunity to spike his rival's guns and complete yet another dramatic coup that would confirm RBS as the Bank That Always Won. In doing so, he'd send a message to the rest of the banking world that there was no upside in messing with the Edinburgh bankers.
True, this meant reneging on a promise that there'd be no more deals and that RBS would finally slow down and properly digest the businesses it had acquired in recent years - exactly the advice the bank would have given other businesses who'd enjoyed such rapid growth - but Goodwin and the board convinced themselves that one more drink wouldn't hurt them. After all, every other deal had been a success, why should this one be any different? The bank's operational and advertising slogan, "Make it Happen", would be the spur for one final cavalry charge.
Goodwin put together a consortium with Banco Santander and the Belgian group Fortis to launch a $98bn counter-offer for the beleaguered Dutch bank. At the time this raised eyebrows in the city and no wonder. It was the biggest banking deal in history, launched, as events would subsequently demonstrate, at the top of the market. ...
[T]he bank's new chairman Sir Philip Hampton told shareholders that without the ABN-Amro fiasco, RBS would have made an operational profit before tax and goodwill impairments. Perhaps it would have. But with ABN-Amro on the balance sheet, RBS posted a record corporate loss of 24bn. As Hampton puts it, with some understatement, "With the benefit of hindsight it can now be seen as the wrong price, the wrong way to pay, at the wrong time and the wrong deal."
RBS's entirely avoidable collapse has stunned Scotland. Politically, it has had an impact too. Financial services were the long-awaited replacement for ship-building and heavy industry and were key to Edinburgh's transformation from douce dowager to one of the more dynamic cities in europe.
At RBS HQ there's a kind of stunned defensiveness as employees accustom themselves to their reduced status. The swashbuckling pirates of the north have been downgraded to galley slaves, toiling for the taxpayer. That most of them were blameless for the excesses that destroyed the greatest brand in Scottish business is scant, in fact no, consolation.
--Noam Scheiber