John Gapper, assessing the prospect of Sir Fred Goodwin getting his hands on ABN Amro, first takes a trip down memory lane in his weekly FT column.
“When George Mathewson, the bank’s then chief executive, flipped through the results (15 years ago) and went on to outline how he intended – no, he would – make this little Scottish bank compete with big English clearing banks, I maintained my professional scepticism. He sounded persuasive but could he do it? Probably not…
“RBS was always iconoclastic. Sir George, an impatient and irascible man (in what I found an endearing way, not having to work for him) was not a banker born and bred. He had been a venture capitalist and headed the Scottish Development Agency. He had little respect for social niceties or the opinions of many others.”
Fast forward to today, with Sir Fred now in charge, and RBS is facing its doubters once again. Investors do not entirely trust the current chief executive. They are not sure that he can raise the money (for ABN), or will do all that he is promising, and they recall that he overpaid for Charter One in the US.
“I, however, have time for him because – with the odd exception – RBS has been doing what it said it would for a long time,” Gapper declares.
“NatWest was a good example of a troubled and bureaucratic place that needed someone determined enough to cut through all the accumulated nonsense. Sir Fred, who still has around him many of the same senior executives who worked under Sir George, turned out to be that person.
“This is the competitive advantage of private equity funds, which buy companies and set out to remodel them to restore growth within a few years. One reason public companies underperform in the same task is that managers are less impatient and intolerant of failure and do not get their hands sufficiently dirty. The RBS culture is closer to private equity than public enterprise.
“The thing that struck me as particularly RBS-like last week was Sir Fred’s assertion that his consortium’s hostile bid was more likely to achieve what it promised because there would be no ambiguity about who was in charge. “NatWest would never have worked if it had been a merger or a friendly deal because some tough decisions had to be taken quickly and irrevocably and implemented . . . You just needed one singer and one song.”