A spectacular collapse; a £45 billion taxpayer rescue; round after round of redundancies; a never-ending stream of fines and penalties running into hundreds of millions of pounds for market-rigging and misconduct; and now a sale-back – at a £7.2 billion loss to the taxpayer.
And how many at RBS have gone to jail for any of this? Answer: big fat zero.
The RBS saga is an appalling record of hubris, mismanagement, greed and arrogance.
It has constantly confounded assurances that “corners have been turned” and “the culture of greed has changed”.
For the past seven years a colossal error of politicians and commentators has been to heap all the blame on Fred Goodwin.
It’s a charge I have never accepted.
Goodwin bore primary responsibility for the catastrophe. But he was far from alone.
He was supported to the hilt by the City and political establishment – right through all the acquisitions – including that of ABN Amro.
He relied on assessments by credit rating agencies that proved wildly wrong.
And far from RBS being cured of its ills on his departure, it has gone on to misbehave, rig markets and break regulatory rules.
Massive fines and penalties still lie ahead for misdemeanours in recent years, amounting in total to a £6 billion hit to profits.
Analysts at JP Morgan reckon it faces the biggest remaining bill for misconduct of the major UK banks, seven years after its bail-out. The provisions cover expected foreign exchange fines, PPI pay-outs and penalties related to US mortgages in the next two years.
In addition to these, RBS has been hit with eight fines from the City regulator since 2002, with the penalties adding up to £131.8 million. Seven of these have occurred in the last four years.
This miserable catalogue has blighted our reputation in banking and financial services for a generation.
Public fury may have subsided from its peak. But the prospect now of a whopping loss for the support taxpayers have given leaves a final bitter taste in the mouth.
Up till now there was a comfort of sorts that the sale of the taxpayers’ 80 per cent stake would be sold at a break-even price, if not a small profit, and that taxpayers would get their money back.
Now even that sliver of comfort has gone.
RBS shares stand today at 360p – way below the 502p a share price at which Gordon Brown acquired it in the dark days of 2008. The cost of that rescue was £45.5 billion. A sale at today’s price would net £32 billion.
To mitigate this loss the government’s investment bank adviser Rothschild added up all the various fees paid by RBS to the Treasury over the years for support after the bailout and concluded that the taxpayer stood to lose £7.2bn net on the rescue.
And even allowing for this loss, the taxpayer should make a £14 billion overall profit on its 2008 rescue of RBS, Lloyds Banking Group, Bradford & Bingley and Northern Rock.
Bitter though it may be to accept, the decision to proceed with a sale of RBS well below the purchase cost is the right one.
For the bank is mired in a trap partly of the government’s making.
It is stuck in a corporate no man’s land, unable to move forward while that 80 per cent holding effectively blocks external institutional investor moves to force the pace of change.
That shareholding, held by UK Financial Investments, has been passive and has not been invoked to speed boardroom changes, reform the bonus culture or speed up the bank’s reform programme.
When the bail-out was effected, the government imposed a self-denying ordinance on UKFI, as it did not want it to be seen as a nationalisation, with the state interfering in the management and operations of RBS.
Correct though this was, it meant that outside shareholders had little say in the bank’s affairs and indeed they were left holding disenfranchised shares.
It is a moot point whether a greater proportion of outside shareholders would have made much difference. Among institutional investors particularly, corporate governance and shareholder activism have been lamentably slow to develop. But today boardroom pay and bonuses are being more vigorously challenged.
So massive is the RBS share sale in prospect – the biggest ever privatisation by a UK government – it will be spread over several years and will take different forms – starting with an institutional offer for sale and including (later on) an offer of shares to the retail public.
Hopefully by then there will be an improvement in RBS’ operational performance and a reduction in those outstanding fines and penalties, so that the share price will be higher and the loss on sale rather less than that currently envisaged.
The RBS that will emerge from all this will be dramatically smaller, with a tight focus on UK personal and corporate business services.
Some semblance of normality will have returned, the glory, gory days will be left behind and the return to the private sector will close the most miserable chapter in UK banking.
But the taxpayer loss should never be forgotten and should serve as a reminder that no bank should ever again be allowed to grow “too big to fail”