RBS: Inside the Bank That Ran Out of Money

The outlook is always a difficult subject. Predicting the future is a

hazardous occupation at the best of times and these are not the best of

times. Sir Fred Goodwin, Knight of the Realm for services to banking,

was the chief executive of the Royal Bank of Scotland when it ran

up the biggest, corporate loss in history. A loss of �24.1 billion.

In the good times, the Royal Bank of Scotland grew faster than any

other British bank. It pulled off a record-breaking deals. It 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. Then in October 2008, RBS

came within hours of running out of money. Any news on the banking

bail-out? It had to be bailed out by the British taxpayer. It is

decision time. RBS was not the only bad to be rescued, but by the time

of the financial crash it was the most toxic bank in Britain. I knew

sorry? That is something that did I am Andrew Johnson from the Daily

Express. Would you give us some idea why you are the right man to

lead the bank out of the situation, given that what has happened has

been a failure of risk management, which is one of the core

competencies they bank is supposed to have? It is not me solely that

runs the bank. There are a few people who run the bank and we are

of one mind to go forward. We are in the middle of a crisis which has

been the worst for a generation, for 70 years, and it is certainly

the case the industry is in a tight place and as a major participant we

are in a tight place. Do you not think you have been in the job too

long? There have been studies where they show chief executives start

losing effectiveness after seven years. With individuals it is very

hard to pin things down. I do not know how long reporters have to

report before they lose their effectiveness. Too long. I will not

do this job forever, but right now you find me galvanised to the task

at hand. We have got a big task and we are of one mind and of one focus

to get through this. This is a film about Scotland's largest bank, up-

to-date and looking after every aspect of your business life. It is

a friendly bank, it is the Royal Bank. It was seen as a Scottish

back with a Scottish identity, but one that was looking to do things

differently and was not the same as the run of the male, slightly

larger banks that dominated the scene across the UK at the time.

The Royal Bank of Scotland was a Scottish institution, prudent,

effective and ambitious. In 1998, its iMac -- dynamic and successful

Jeep executive George Mathewson was looking for new blood to lead the

bank forward. I was looking for a finance director, but we would like

one who had potential to become chief executive because replacing

meat was on my mind as well as other people's minds. I thought,

wait a minute, we have Fred Goodwin right here in Scotland. He did

strike me as someone who could lead. I just felt he had a lot to offer.

Fred Goodwin was the rising star of Scottish banking, a chartered

accountant in charge of the Clydesdale Bank before he was 40.

He had earned a reputation for cost-cutting and acquired his

enduring nickname. The Fred the Shred reputation was there. He was

a tough, hard man. No one doubted his intelligence and his

determination, but he had that reputation for being quite

difficult as a boss and quite hard on staff. My first hearing that

Fred Goodwin was coming on board from the Clydesdale Bank was that

they had been celebrating his departure for three days and they

wished us all the very best of luck. That was my first introduction to

the name Fred Goodwin. I will not forget it. With George and Fred at

the helm, Scotland was no longer big enough to contain RBS's

ambitions. They aimed to grow RBS into an international banking for

us. But they were not the only ambitious, Scottish bank. The Bank

of Scotland was also hungry for growth. Both of them faced the same

obstacle. They both had the same problem, they were anchored in a

small economy in the home market. Both took the view they had to make

a jump to something bigger to avoid their over-dependence on the

Scottish economy. The quickest and the boldest way to achieve this was

by carrying out a takeover. Traditionally in banking takeovers

involved bigger banks buying up smaller ones. That is not what RBS

had in mind. First, RBS audaciously sniffed around Barclays. But they

were warned off by the City. Then, they both began to look at another

venerable City institution, Nat West. It was a bank more than twice

their size. They say when a company builds a new head of us, gets a

corporate jet and has a fountain and a flagpole, it is time to sell

the chairs -- shares. Nat West built the NatWest Tower. NatWest

Bank was huge, but ailing. Its share price was low and it was Bank

of Scotland that moved first. we see with NatWest is a hugely

undervalued opportunity, it is undervalued and underperforming. We

believe we can help turn it around. I was at the Ryder Cup and my phone

went illegally and they said you have to come back, the Bank of

Scotland have just bid for NatWest. At a meeting in London they were

all saying, you must bid. I said, no. We will bid when we know as

much as it is possible to know. few weeks later, RBS joined the

takeover battle, promising bigger savings. George did the strategy,

Fred mustered the detail and set about convincing the City that RBS

could pull it off. The bulk of the cost savings relayed to back off as

processing, to head office, they do not relate to customer facing staff.

There was incredulity that two small banks could actually have the

nerve to go for this bastion of the British banking industry. Some of

the management felt let down by the City, that they could take

seriously a bid of this nature. there were doubters, but the

general feeling at the time in the City was that anything other than

the current NatWest management. After a hard fought takeover battle,

NatWest shareholders had to decide where their bank's future lay.

was a close-run thing. In fact, at lunchtime on the last day, I

thought we had one and then the tide swung against us in the

afternoon. I was very fed up. At the end of the day, it was the

shareholders' decision. There was elation for about 10 minutes, no,

it was about two days. At that stage I stepped back to become

deputy chairman. There was never any question of whether Fred

Goodman was not the right man to take over the new RBS. Fred and

George had arrived on the big stage. As the savings, including 18,000

job cuts and integration as were made, it became clear that not only

had they done the biggest hostile takeover in UK history, but they

had done it brilliantly. Fred got a bonus of �800,000 and George one of

�750,000, which he insisted would barely give him bragging rights in

a Soho wine bar. It was an extraordinary exercise in putting

together two banks. They had a very strong following in the city. It

means your share price looks better because investors want to buy your

shares and people believe in your story, so they encourage you to do

more deals because that is what is working. The share price dipped a

little, then it jumped up. RBS now had access to the future vaults of

NatWest savings and deposits. The question was what to do with them?

The answer was spend them. They bought another insurance company, a

credit card operation in Germany and a second hand car franchise.

What can I say about acquisitions that has not been said before?

Goodwin picked up a knighthood along the way. We do not do

acquisitions for fun. He was acclaimed by Forbes Global magazine

as the Businessman of the Year. The place that made most sense for

RBS to do at positions was the USA. It was the biggest market in the

world. -- acquisitions. Thousands of little banks sat waiting to be

gobbled up and RBS already had Citizens. Citizens was run,

prudently, by Larry Fish. We are very proud of our credit record

over a long period of time, so we have avoided unsecured lending to

the consumer and the corporate sector. Larry Fish probably said in

the morning, I will take deposits, and in the afternoon I will take

little deposits and later on if he was brave, I will lend money. It

was a community bank. It was the third largest bank in Rhode Island,

not a major claim to fame, but it was very community-based. It was

big in small areas. But RBS wanted Citizens to be big in bigger areas.

Larry embarked on an acquisitions spree of his own, a prudent

acquisition spree, buying up other small banks dotted around New

England and stripping out costs and selling new, financial products to

the customers. In 2001, Larry Fish raised the stakes and expanded

Citizens West into the huge Philadelphia market, spending $2

billion on a bank called Mel and financial. This deal made Citizens

bake in a much bigger area and earned it a starring role in RBS's

next corporate video, alongside its many other impressive purchases and

Just three years on from the NatWest deal, RBS was by some

measures the fifth-biggest bank in the world. Edinburgh was the

headquarters of an international banking group. But there was a

price to all this growth. The culture inside the bank had changed.

We lost a lot of the collegiate atmosphere. Under George he very

much wanted to hear what people had to say and he wanted to bring

George was very charismatic. He was extremely well-liked and respected

by many who worked for him. Fred was more efficient. Probably the

best description. He can be a little too acerbic. He is not very

good at suffering fools gladly. In fact, he could be quite forbidding.

Fred had a very impressive intellect but he used it to bully

those around him. People were intimidated from speaking their own

mind because they feared his reaction. This created an

atmosphere around him which inhibited even the most senior

people in the bank from expressing their views. This atmosphere was

apparent at the highest level in the bank. The morning meeting was a

particular innovation they brought in to Nat West. A team would get

together and they would sit for as long as it took to thrash out the

problems of the day. The morning meetings quickly became known as

the morning beatings. Fred seemed to just a brand and decide which

senior executive was going to be roasted that day. It was nice --

not nice to be part. But you would say, at least it was not made. Suck

it up was the phrase that was used. That is life at the -- in the big

city. He was asleep at the wheel. always believed that there were

many ways and spinning as far as leadership was concerned. Fred had

his way and for a long time it was very effective. Fred proved to be

particularly effective for RBS shareholders. Despite, or be hap --

perhaps of, his robust management by at -- style, he got results. He

delivered profits year after year as the bank grew. In May 2004, the

moment RBS had been waiting for A deal that would transform

Citizens from a big regional bank into one of the biggest banks in

America. The target was a bank called Charter One. Charter One was

be -- brought to as by Larry Fish. You had seen all of the

acquisitions we had done previously. We had a very successful

acquisition and integration record. He believed in at low risk. Charge

a one would expand Larry Fish's empire into the huge Chicago market,

with its millions of households and potential customers. It was a very

logical geographical extension. It is a significant increase in scale.

Overall we think that there was a low risk acquisition to execute.

Fred and the border backed the deal and RBS made a huge offer of $10.5

million. -- Fred and the board. RBS became the 7th biggest bank in the

USA but they did not stop there. Shortly after this, RBS bought a �1

billion state in China. -- stake in China. RBS was now a global

14th December 2005 was a big day in the history of RBS. A new purpose-

built headquarters in Edinburgh was being opened by the Queen. Just as

she had opened the NatWest Tower 24 years earlier. The new headquarters

was a work of wonder. It certainly had a fountain and it has built

next to the airport where the senior executives could use the

private jet. While RBS bosses mingled with royalty, City analysts

were less impressed, and wondering if the time had come to share RBS

shares. The bank's share price was not performing as well as expected.

The problem was Charter One. RBS was struggling to make its usual

savings and grow its usual profits and the City pot Fred and his bank

had paid far too much. -- thought Fred and his bank. It's was not a

good deal. It was over sold to us. The city but into the deal but they

were sceptical. They never thought The City's scepticism at the buying

spree came out at an analyst conference at this time. I think

there is the perception among some investors have that Fred is a

That is not the first time I have heard that. I am sure there are a

lot of people who think that. I do not think it stands a lot of

scrutiny in terms of what we have done. The results demonstrate a

coherent strategy and one that we have executed with considerable

internal discipline. I up until Charter One, Fred had had free rein

on anything he wanted to do. What Charter One did was make the city

step back and think about the price that RBS was paying and, crucially,

people started to look at the underlying business and the actual

growth that was taking place in the existing businesses. By 2005,

Fred's RBS had acquired 25 businesses and had spent nearly �30

billion. But its shareholders now RBS could still expand by making

money out of money. This was another way of saying Corporate and

investment banking. In 2005, RBS Investment Bank was run by Johnny

Cameron, the son of one of the bank's former vice-chairman and a

financial wizard in his own right. I will make a huge effort to walk

the walk. We may be successful but we are still restless. We talk

about keeping the magic. There is some magic about what got us here

and about our culture. We need to retain that even while growing this

international business. Johnny Cameron's investment bank took

money from Nat West and RBS accounts and invested it in a whole

Sitting within the investment bank was a small specialist outfit

called RBS Greenwich Capital, tucked away in a quiet corner of

Connecticut. We had inherited a RBS Greenwich Capital with NatWest and

I went there and it was full of very clever people. It also had

some of the best risk-management I had seen anywhere at the time. You

had instant results. You could see how they were managing their risks

and all of the rest of it. I thought there was a reasonable

chance we could well out losses. RBS Greenwich Capital made money

out of mortgages, not as a lender to house buyers, but as a trader.

It but huge bundles of thousands of ordinary domestic mortgages from

banks and other lenders across the USA. Then, it packaged these up,

sliced, diced and sold them on to The investors were taking Straw and

turning it into gold by slicing and dicing. As they kept slicing and by

saying they were skimming off profits and RBS Greenwich Capital

was at the forefront of taking those mortgages and trying to find

a new and innovative ways of essentially making money for the

In the early years of Johnny's reign, the American housing market

was booming, and mortgage trading was where the big money could be

It became a bubble. As time went on, banks began to branch out of money

to lend to. -- run out of money to lend to. There are only so many

times you can do that. Most people with a lot of income and good

credit are already owned a house so if you were looking for new

customers, where did you go? You looked at people who did not have a

house or credit and people who, in These people were known as subprime

borrowers. Although these mortgages were more risky, they were still

sliced, diced and traded. As long as they kept paying their mortgages,

traders and investors would keep getting rich. This was a business

that was built on that. It was that layered on that covered with debt,

sprinkled with debt. That was built into it every layer. -- debt was

built into it every layer. Greenwich Capital moved up the

leader table of mortgage traders, competing with the biggest Wall

Some of its trading was prime, sum up subprime, and some exotic

cocktails of both all mixed up together. -- some subprime. It was

The single most important impression I want to leave you with

is this is a great business. had some of the smartest people in

the world working on this, top mathematicians and physicists. They

were not working in nuclear establishment, they were working

financial borders to see how they could model risk and predict the

future. That is where the income was. You packed it up with the big

numbers and you could make tens of In 2004, the profits of Johnny

Cameron's part of the bank grew by nearly 18 % from the previous year.

In 2005, its profits were up another 22 %, and it accounted for

almost two-thirds of the entire RBS Good morning, ladies and gentlemen,

and welcome to the 2006 Interim Results Presentation. It is a

special pleasure for me to welcome you today as this is the first set

of results since my taking over as chairman. In 2006, the success

story continued, and with Sir George Mathewson retiring as

chairman, it was down to Sir Tom McKillop to deliver the good news.

Total income for the first half rose by 10 % to �13.6 billion.

resulted in group operating profit rising by 15 % to over �4.6 billion.

I believe that today's results, based as they are, purely on

organic growth, demonstrate these fundamental strengths of the group

and the sustainability of hour operations. Over half of the profit

that year came directly from I am happy with the platform we

have built in GBM. I think our results are first class for the

business we are in, but there are things we can do more and we will

do more. That is part of the excitement. Following on from these

results, the city began to believe once more in the RBS story. And the

Bank's share price inched back up. RBS allowed itself another glitzy

If we were wanting to build what we have today from today, it really

could not be done. The bank's senior managers targeted more

growth. In terms of what is happening at the moment I remain

extremely excited about what is happening in front of us. Everyone

seems to be benefiting from this magical, a new form of banking and

nobody likes to admit they do not understand things and there is a

sense of pride involved in it. As a result the barrier -- bankers were

allowed to carry on what they were doing largely unsupervised and they

did not understand the risks their Just as everything was looking rosy

for RBS, the engine driving the growth of the entire banking

industry ran out of steam. In late 2006, the American housing bubble

well and truly burst. As American interest rates went up, many of

those with sub-prime mortgages could no longer afford their loans,

so they stopped paying. Anxiety spread throughout the markets and

across continents. It is a big wake-up call for the UK, the

analysts and investors. There was a profit warning from HSBC at the

beginning of 2007 where they revealed they had suffered heavier

losses than expected on his portfolio of sub-prime mortgage

loans in the US. At that point they started looking around saying, who

else has got these kind of loans? RBS reassured the City there were

not in sub-prime lending. We have portfolios at Citizens where we do

not do sub-prime lending. It is another land mine we have kept away

from. We have seen evidence that is a good place not to be. But all

that slicing and dicing of mortgage debt meant there was no escape.

What happened in the system is sub- prime became such a big part of

what banks did, not just originate it, but buying it, lending to the

people who did it, packaging it, selling it, structuring it, trading

it. Every bank did sub-prime. is the housing exposure you have

got? Analysts wanted to know how much sub-prime RBS held in its

investment banks. The amount of sub-prime, sub-investment grade

exposure we have across warehouses and collateral lending is really

very, very small. It is a miniscule amount. Good morning... With a

miniscule, sub-prime problem, the investment banks were in great

shape and Fred was optimistic about the future. We faced 2007 with some

confidence. But if the American housing market was in decline, how

would our beards grow now? I as long as I have been writing about

RBS, people have been speculating about RBS making a big acquisition.

There was a sense that when possible, when the conditions

allowed it, that Fred Goodwin was really keen to do another big deal.

To could you give us some sense of how you feel at the moment about

the possibility of acquisitions? Whether you think you are out of

the sin bin when it comes to future deals? I think we are out of the

sin bin, but that does not equate to making acquisitions. We have

been clear all along about our guidance on acquisitions. The

outlook is conditioned by availability. I do not think there

is anything out there at the moment that seems desirable or affordable.

I and everybody else interpreted it as a sign there were no big

acquisitions on the horizon. In retrospect, that turned out to be

not the case. Five weeks later, Fred Goodwin announced the biggest

banking takeover in history. The target was a Dutch bank, one of

Europe's the largest called ABN AMRO. It contained an American bank,

a Brazilian bank, banks in Italy, Holland, India, an investment bank

which sprawled across the globe. It was big, unwieldy and badly run.

For the second time in less than a decade, RBS entered a huge, hostile

takeover battle after a competitor moved first. This time it was

Barclays Bank that announced a friendly merger with ABN AMRO. So,

Fred and his advisers put together a consortium of three banks to

launch a not so friendly takeover. The most important thing is that

Barclays was going to buy the whole of ABN AMRO. They talked at the

time of a merger of equals. The bed of the consortium was not friendly,

it was aggressive. RBS, Santander and 40s. They all wanted separate

parts and they wanted to tear it up in two parts. RBS's share of the

spoils would include the investment bank and the American operation, a

large bank based in Chicago called LaSalle. It would give RBS access

to the lucrative, American, corporate market. But ABN AMRO's

management was fighting for survival. To scupper the consortium

they sold off LaSalle. Quite a few people were convinced RBS would

throw in the towel after the announcement LaSalle was going to

be sold. We all knew the Investment Bank was not that successful, so

why would RBS want to spend so much money on something that is not so

successful? ABN AMRO has many good businesses, many attractive

franchises and operates in many attractive markets. That got a bit

lost in the rhetoric around the subject. RBS pressed ahead

regardless. In a conference called to analysts, Fred announced there

would be no major scrutiny of the ABN AMRO books. It is a process

You need to do due diligence in order to make sure you know what

you are buying, what the Bank promises to be. Therefore, it

surprised me they did not do due diligence. It is unbelievable. Come

on, you are spending so much money. You take a big risk. I do not think

they had any idea what they were buying. Almost every question you

asked on that respect, the answer came back that when we did NatWest,

we did it like this and this is what we are going to do again.

is worth comparing it to our experience with NatWest. We had

limited to diligence. But that interview when I went over there

filled me with enormous confidence. RBS was filled with such confidence

that they offered 27 billion euros for their share of the massive deal.

However, while the Dutch regulators were delaying the deal being signed

off, it became clear that the sub- prime problem was not going away.

In fact, it was getting worse. The crisis was spreading from lenders

up the food chain and penetrating investment banks. There was no

knowing where it might end. By the time RBS was buying ABN AMRO, there

were people saying this deal is completely mad. There was

definitely pressure put on RBS by ABN AMRO investors, from its

partners in the consortium, particularly Santander. There was

pressure to put on them to see the deal through. There was probably

also an element of pride on Fred Goodwin's part. I had no idea why

the Royal Bank did not walk away. They could have walked away. Life

was obviously getting tougher, and yet they still continued to pay top

dollar. There would have been a penalty for walking away from it,

but it would have been a very cheap penalty! The board of RBS

unanimously approved the deal. RBS went ahead with the biggest banking

takeover in history. It took the unusual step of paying mostly in

cash from the Bank's reserves. Welcome to our interim results

presentation. But the next RBS results meeting and optimism

prevailed. Business is very good indeed. We are one step removed

from it. We have never lent directly to people who are involved

in sub-prime. We stand back from that. We have a business in the US

that is involved in the packaging of those debts. We see what is

happening, it is affecting the market in which we operate, but it

is not impacting as in a direct way. Johnny, you had something you

wanted to add. The complexity of the products were part of the

problem and the interpretation you could put on his statements about

not doing sub-prime and not having ownership of those assets, would be

the interpretation he did not understand that fully himself. They

were certainly complicated products. I think perhaps only one or two of

the directors might have understood that properly. Six months ago,

there was a lot of speculation ahead of our annual results and

presentation that we would be adversely affected by the sub-prime

situation and it did not happen. We said it would not happen, and you

have seen it again today. We are not operating in that space.

directors reassured the City that RBS's Investment Bank was still in

good health. We cut back a lot since the year-end of 2006 in our

exposure to these markets and I told you then they were very modest.

We have not taken any credit losses on our portfolio. Generally

Worleston volatility has made for some difficulties, it has made for

some opportunities as well. September, the sub-prime crisis

finally spread to Britain's High Street. Northern Rock experienced

the first run on a bank in the UK for nearly 150 years. Markets went

into turmoil. Surely after words, and to its dismay, RBS was finally

able to discover just what ABN AMRO had on its books. It was not good

news. It contained exposure to hundreds of millions of pounds to

sub-prime related investments which were turning toxic. RBS could

reassure the City no longer. Johnny's own investment bank was

Fed announced that RBS was writing off �1.5 billion. -- Fred announced.

When we saw him in 2007, it was clearly the creation of a lot of

other banks. The big mystery for me that has not become clear is why

this man who paid such attention to detail knew so little about what

was going on in this giant investment bank. What people saw

was this huge global bank sitting on the doorstep which had grown

from humble beginnings to become a powerhouse globally and it was

difficult to equate that with a bank that could have problems.

losses did not sold -- stop there. In February, billions were wiped

off of RBS's investments. They had been sliced, diced and finally

trashed. Its cash reserved, drained by the purchase of ABN Amro -- ABN

Amro, were struggling to strain. One vital measure of its financial

health, its so-called Core Equity Tier One Ratio, was getting

dangerously low. Analysts wanted to know just how low. Are there any

questions you might have. Can you tell us what is the Core Equity

Tier One Ratio on a look through basis? Are you saying it is a

number that you know that you cannot share with us or you do not

know it? It is a number that you can work out but it is not a number

that we can realise because we will not get to the point to do that. It

begins with a four and a seven. much as we would like to say at

this point... I am sorry, you can work it out or we can work it out?

It is not a meaningful number in terms of how we operate right now

because the group is the group. City analysts grew increasingly

convinced that RBS would have to ask shareholders for more cash. In

financial jargon, and inorganic capital raising. There are no plans

for any inorganic capital raisings or anything of the sword.

remember Fred Goodwin being asked about it repeatedly. The --

anything of the sort. The were no plans for any inorganic planning

exercises. -- Derek were no plans. That turned out not to be the case

several weeks later. As the losses mounted, RBS did ask shareholders

for help. P ball stopped believing what he said. -- people. When

people stop believing what you say that is fatal. RBS was running out

More heavy losses came in the spring. By April, there were �6

billion of them. The bank pleaded for double that, for �12 billion to

Shareholders were reassured that this could Secure the Bank's future

As you all know, this morning we I hope you have got a sense to

date... I have a range of emotions about all of this and I am numbed

by this. -- a sense today. I feel this has overshadowed the strength

of this business. I hope you get a sense of my determination to get us

out of this place. My colleagues and I do not enjoy being in this

place but we have a business that is strong and resilient and we are

taking it forward to get us out of this situation. Maybe you need to

be a bit of a masochist. It is when things are dire that you can see

organisations perform. In the midst of this there are still lots of

opportunities out there. If we can drive the businesses properly for a

word, this can be differentiating. I am a great believer in sorting

out who the long-term winners will RBS had grown and tell it could

grow no more. It became, briefly, the biggest bank in the world by

assets. At its bloated size, it left the bank or vulnerable. The

one golden rule of banking is that the banks must be able to cover

their balance sheet through cash for loans from other banks. The ABN

Amro take over double the size of RBS's balance sheet, took it to

nearly two -- �2 million in debt at The credit crunch turned into a

financial crisis and the markets seized up. RBS had run out of

options. Its cash reserves were trained on ABN Amro and its share

price dropped like a stone. But other banks held on to it. The Bank

of England was keeping it afloat. Confidence was evaporated. For a

few days, the entire baking system teetered on the brink. -- banking

system. RBS came within two hours of running out of money and taking

down the British financial institution with it. I am angry

with what has happened. Almost all of the losses in the subprime

market in America are related to the acquisition of ABN Amro.

was forced to accept a �20 billion bailout from the UK government paid

One condition of the Bank being bailed out was that Fred Goodwin

leave the company. Are you sorry? Before he left, he had to face

RBS's shareholders one last time, shareholders who had seen over 90 %

of the value of their shares finish during his reign. A lot of people

have been waiting for this. I know you speak on behalf of the board

but this is an opportunity. A lot of people would like to hear him

say sorry. I can only ask Sir Fred I do not want there to be any doubt

in anyone's mind. I am entirely Surrey on behalf of I'll of the

board. -- I am entirely apologetic on behalf of the entire board. I am

sad to leave the company under these extremely difficult times.

There are probably 20,000 people in Scotland who built up a little nest

egg. That nest egg was blown out of the water. But there are lots and

lots of people who had been affected. That hurts me, actually.

I do not think that needed to happen. It did not have to happen

this way. We did not have to try and become the biggest bank in the

globe. If we had been more prudent and careful we could have avoided

the storm. We should have avoided Incredibly sad. Incredibly sad.

Bemused as to how it could actually happen. When my father died, he

felt, as a Glaswegian, this was the place he felt safe. I felt this was

not just a tragedy not just for the As a human being, were you

disappointed? Angry or upset? obviously disappointed. I was

obviously upset. Angry... Not When it all played out, Fred was

not alone in leaving the bank. Johnny Cameron's banks incurred

losses of millions of pounds and he resigned, forgoing a pay-off, and

eventually agreed not to hold a full-time financial office again.

Tom McKillop followed a few months later, also without a pay-off.

Larry Fish retired. He had not done subprime mortgages. He had built up

a portfolio of other investments worth around $10 billion which

later turned toxic. He left RDS with a pension pot of $27 million.

And Fred? Well, everyone knows about Fred's pension. His pension

entitlement has widely been reported at hundreds of thousands

of pounds but the actual number is 693. The media speculation is

slightly lower than the actual Fred eventually agreed to reduce

his pension to �340,000 per year. A fine reward for running a total

losses of �24.1 billion. And there, in a nutshell, is what happened