‘We’re going to run out of money this afternoon’ — 10 years since the world’s once-biggest bank needed UK Govt money to survive
1 October 2018
The Royal Bank of Scotland was once a famous Scottish institution, a bank with a reputation for financial prudence.
Much of its spectacular early-2000s growth, however, was connected to the American subprime mortgage market, which eventually – and catastrophically – collapsed.
In October 2008, RBS found itself on its knees and Alistair Darling, then the Chancellor of the Exchequer, found himself on the end of an extremely urgent telephone call.
Without immediate intervention, the bank’s money would have run out that afternoon.
When the then Chancellor of the Exchequer received a panicked phone call from the chairman of The Royal Bank of Scotland Group
Alistair Darling recalls Sir Tom McKillop’s ‘anxious and agitated’ call to his office.
The wider bailout that followed would eventually cost the taxpayer well over a trillion pounds and effectively take RBS into public ownership.
Fred Goodwin, the bank’s CEO, was forced to leave the bank he had run for eight years. In 2012 he was stripped of his knighthood.
He had first learned of the disaster befalling his bank during a presentation he was giving about growth aspirations and opportunities.
At the end of the presentation, a member of the audience asked a question: “Sir Fred, if the opportunities available to you are so exciting – and if everything’s going so well at the bank – why has the share price fallen 35% since you started speaking?”