RBS : Royal bank of no money
RBS.....Royal Bank of Scotland...One of the biggest banks in the UK. Runs out of money?!
Sir Fred Goodwin, was in charge of the services to banking, he was the chief executive of the Royal Bank of Scotland when it ran up the biggest corporate loss in British history which was a loss of a staggering £24.1 billion pounds, which seems strange because at points it was the fastest growing bank in the UK it outgrew every single British bank. It pulled off record-breaking deals, they made billions of pounds in investment banking, its top executives drove the bank forward to become, at one point, the world’s biggest bank, and collected fabulous bonuses along the way.
However it all came crashing down in October 2008. They had to be paid out by the British tax-payer, it may not have been the only bank to be rescued but it was the most toxic bank in Britain.
George Matthewson, was the chief executive of RBS in 1998, and his time was coming to an end so he had to look for someone to take over. He eventually found a man called Fred Goodwin, who was a rising star of Scottish banking, was also a chartered accountant who was in charge of Clydesdale bank before he was 40. There, he had earned a reputation for cost-cutting and acquired his enduring nickname. The "Fred the Shred" reputation was there, that this was a tough, hard man. No-one doubted his intelligence and his determination, but he did have that reputation for being quite difficult as a boss and quite hard on staff. The funny thing about this is that Clydesdale bank had celebrated his departure for three days and they wished RBS the very best of luck. This, right here should tell RBS that there is something seriously wrong, the fact they celebrated for three days shows that he is not a very well liked man and that the way he worked must have been too hard as everyone was happy he finally left forever. In my opinion this is a massive warning sign. Don't sign him to the company even though his accolades show good things, he might have bad personal skills which makes employees demotivated which in turn means poor service and then customers could potentially be unhappy.
They were not the only bank in Scotland wanting to expand into England and the rest if the world. The bank of Scotland was their rival in Edinburgh and they were wanting to grow too, so it was a battle they had to win. They had the same problem though, they were too dependent on the small Scottish economy, so they knew they had to make the jump to grow, so they weren't overly dependent on the Scottish economy. In my opinion, being dependent on someone or something can make you and the business look like it is weak and that it cannot stand on its two feet, making the jump is a good way to show that you aren't afraid to take risks and in turn you aren't afraid to do things which can benefit yourself.
Its harder than it looks to break into a different country when you're a bank especially when there are plenty of other big fish in the sea.
So how did they end up having no money.....well here is what happened
The best way for RBS to enter the market of banks in England is to takeover another bank, but the problem was they were a small bank and it was hard for them to find capital to takeover a larger more successful bank. In the end they took over NatWest which allowed them to enter the English market more easily as they now had a bank that was well known throughout England. Although it looked like it was going well, even though they had to integrate sectors and so jobs were cut which did mean money was being saved, it actually was going downhill but very slowly. Why? The reason is becuase they took over a Dutch bank called ABN Ambro, seems like a good thing right? WRONG! it meant they mad a huge loss of around £16bn which helped towards their demise.
What might have caused this downfall is easy, the people running RBS were a massive factor in the losses they incorporated. There was George Matthewson whom i have mentioned ealrier. He was a good leader however his choice in his successor was rather poor considering he was hated by his former company. That man was Fred Goodwin, when you first hear that name it sounds rather nice. But that is all a lie. Fred Goodwin is the biggest reason for the failure of RBS, in my opinion. The reaon for this is how he managed the bank, he want always liked which is a big drawback in management. Considering he allowed motivation to decrease, since he wasnt liked very much from his employees. The worst thing he could have done is attempting to takeover banks in the recession of the financial crisis and that is exactly what he did, although it worked out with the takeover or NatWest, it didn't go so smoothly with the takeover of the Dutch bank ABN Ambro as this lead to massive losses.
Sir Fred Goodwin, was in charge of the services to banking, he was the chief executive of the Royal Bank of Scotland when it ran up the biggest corporate loss in British history which was a loss of a staggering £24.1 billion pounds, which seems strange because at points it was the fastest growing bank in the UK it outgrew every single British bank. It pulled off record-breaking deals, they made billions of pounds in investment banking, its top executives drove the bank forward to become, at one point, the world’s biggest bank, and collected fabulous bonuses along the way.
However it all came crashing down in October 2008. They had to be paid out by the British tax-payer, it may not have been the only bank to be rescued but it was the most toxic bank in Britain.
George Matthewson, was the chief executive of RBS in 1998, and his time was coming to an end so he had to look for someone to take over. He eventually found a man called Fred Goodwin, who was a rising star of Scottish banking, was also a chartered accountant who was in charge of Clydesdale bank before he was 40. There, he had earned a reputation for cost-cutting and acquired his enduring nickname. The "Fred the Shred" reputation was there, that this was a tough, hard man. No-one doubted his intelligence and his determination, but he did have that reputation for being quite difficult as a boss and quite hard on staff. The funny thing about this is that Clydesdale bank had celebrated his departure for three days and they wished RBS the very best of luck. This, right here should tell RBS that there is something seriously wrong, the fact they celebrated for three days shows that he is not a very well liked man and that the way he worked must have been too hard as everyone was happy he finally left forever. In my opinion this is a massive warning sign. Don't sign him to the company even though his accolades show good things, he might have bad personal skills which makes employees demotivated which in turn means poor service and then customers could potentially be unhappy.
They were not the only bank in Scotland wanting to expand into England and the rest if the world. The bank of Scotland was their rival in Edinburgh and they were wanting to grow too, so it was a battle they had to win. They had the same problem though, they were too dependent on the small Scottish economy, so they knew they had to make the jump to grow, so they weren't overly dependent on the Scottish economy. In my opinion, being dependent on someone or something can make you and the business look like it is weak and that it cannot stand on its two feet, making the jump is a good way to show that you aren't afraid to take risks and in turn you aren't afraid to do things which can benefit yourself.
Its harder than it looks to break into a different country when you're a bank especially when there are plenty of other big fish in the sea.
So how did they end up having no money.....well here is what happened
The best way for RBS to enter the market of banks in England is to takeover another bank, but the problem was they were a small bank and it was hard for them to find capital to takeover a larger more successful bank. In the end they took over NatWest which allowed them to enter the English market more easily as they now had a bank that was well known throughout England. Although it looked like it was going well, even though they had to integrate sectors and so jobs were cut which did mean money was being saved, it actually was going downhill but very slowly. Why? The reason is becuase they took over a Dutch bank called ABN Ambro, seems like a good thing right? WRONG! it meant they mad a huge loss of around £16bn which helped towards their demise.
What might have caused this downfall is easy, the people running RBS were a massive factor in the losses they incorporated. There was George Matthewson whom i have mentioned ealrier. He was a good leader however his choice in his successor was rather poor considering he was hated by his former company. That man was Fred Goodwin, when you first hear that name it sounds rather nice. But that is all a lie. Fred Goodwin is the biggest reason for the failure of RBS, in my opinion. The reaon for this is how he managed the bank, he want always liked which is a big drawback in management. Considering he allowed motivation to decrease, since he wasnt liked very much from his employees. The worst thing he could have done is attempting to takeover banks in the recession of the financial crisis and that is exactly what he did, although it worked out with the takeover or NatWest, it didn't go so smoothly with the takeover of the Dutch bank ABN Ambro as this lead to massive losses.
In conclusion, this case of RBS running out of money only occurred because of the management of the bank. Fred Goodwin and George Matthewson are two different people who have two different management styles. In my opinion George Matthewson did a grand job with RBS, although it struggles at times, he made sure that his team worked through it and he left the chief executive job at a very good place. That's where it went downhill - with Fred Goodwin - his management stype is good for some people but in all honesty it's not something I like so I wouldn't, personally, want to work for someone who had his kind of leadership qualities. No wonder nobody really liked him.
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