For those of you who did get through the “Who do you believe” piece, and are curious to know how it all panned out at the end, I have two pieces of news for you. First, the story gets murkier and murkier. Second, the butler did NOT do it.
You will recall that we had left the story poised at the brink – will he or won’t he? Let me decode: will Sir Fred the Shred Goodwin apologise to shareholders, stakeholders, employees, taxpayers and the pizza delivery man for screwing up the bank and colluding to screw up the nation’s economy? Or won’t he?
As it turns out, he apparently did murmur some words, which was construed by lip-readers to be tantamount to an apology, if we stretch the meaning of the word ‘apology’. Attaboy, our Fred! Unfortunately, John McFall, Treasury select committee chairman in the UK, refused to accept the apology as being anything meaningful.
Read these:
1. The Sunday Times, on February 15, 2009, carried a story in its online edition, starting “Nobody is too rich or powerful to escape the caustic Glaswegian wit of the chairman of the Treasury select committee…”
“On Tuesday it was the turn of Sir Fred Goodwin and Sir Tom McKillop, formerly chief executive and chairman of the Royal Bank of Scotland respectively, and Andy Hornby and Lord Stevenson, who held the same positions at Halifax Bank of Scotland. McFall’s first question was: were they sorry for the destruction of once-venerable institutions now partly owned by the government and costing taxpayers millions? All four apologised but even after a three-hour grilling, McFall wasn’t convinced.
“There was no sense of real contrition,” he says. “They didn’t seem to think they were personally culpable. It’s not part of their culture. They have a sense of entitlement. Getting bonuses is in their DNA and risk taking is at their core — until the extent of their cavalier risk taking is uncovered and the whole thing implodes.” …
“The next day, addressing the current chief executives of the banks, McFall asked them why they thought they were hated. “I don’t know what they thought of that but John Varley, of Barclays, did admit that trust in the industry had been lost. I think it will take years to recover. This is a difficult time to rebuild confidence.”
2. BBC News - 14 February 2009 (http://news.bbc.co.uk/2/hi/uk_news/scotland/7889665.stm)
Headline: Banking bosses head for a McFall
If "sorry" is the word of the moment, then a certain McFall is the man of the moment.
“The chairman of the Treasury select committee has taken centre stage at Westminster, managing to extract apology after apology from the four men held responsible, by some, for the entire UK banking crisis…
“The man of the moment knows how to grab the attention. “Is sorry the hardest part?" was his opening gambit to the deposed chairmen and chief executives of the Royal Bank of Scotland and Halifax Bank of Scotland.
“Unconvinced by their apologies, he questioned their contrition. “What exactly are you apologising for? We've been told you've been coached extensively and meticulously by PR people and lots of money has been spent, so are you expressing sympathy because your PR advisers advised you to do so?"
"No," said the bankers, but Mr McFall's disdain was plain to see - and the public relations damage was done. “
Things get worse from here. Some people wistfully regretted that the great democratizer, the guillotine, is now firmly ensconced in the pages of history.
3. BBC News - 9 February 2009 (http://news.bbc.co.uk/2/hi/programmes/bbc_parliament/7879616.stm)
Headline: Bank ex-bosses to face committee grilling
Four former bank chiefs who led their institutions to the verge of collapse are set to testify before the treasury committee.
Reports have emerged recently that RBS may nonetheless distribute a total of £1bn in bonuses to staff.
The revelation has prompted outcry among politicians, press and public alike.
Lib Dem (Liberal Democratic Party) Treasury spokesman Vince Cable, writing in the Daily Mail, said that the "financial aristocracy" were "lucky the British have no guillotines in stock".
Similarly, the Independent's Simon Carr argues that "revenge is the answer".
Even worse, people have demanded that the bank bosses should return their past bonuses – surely the most unkindest cut of all.
4. “The Sunday Times, on February 15, 2009, carried a story in its online edition, headlined “Bank chiefs urged to repay bonuses”,
“Treasury select committee chairman John McFall says it is morally right for bosses who brought banks close to collapse to pay back rewards…Senior executives of HBOS and Royal Bank of Scotland, whose irresponsible speculating brought the British banking system to its knees, are to be urged to hand back the multi-million pound bonuses they awarded themselves.
“A report by the Treasury select committee will conclude that, while MPs cannot legally confiscate the six-figure rewards the bankers received over the past two years, it is morally right for them to return the cash.
“The report, due out in April, is expected to be scathing about Sir Tom McKillop, the former RBS chairman, Sir Fred Goodwin, the former RBS chief executive, and Andy Hornby and Lord Stevenson, the former chief executive and chairman of HBOS, for failing to show enough contrition when they gave evidence last week.”
The sponsorship deals that RBS signed up has come in for a great deal of abuse. Sachin Tendulkar has even been asked to return the money he got from modelling for the RBS ad which started me off on this journey!
5. Brand Republic - 16-Feb-09, 09:05
(http://www.brandrepublic.com/News/881116/RBS-attacked-spending-200m-celebrity-sponsorship/)
Headline: RBS attacked for spending £200m on celebrity sponsorship
“The Royal Bank of Scotland, bailed out with billions of pounds of taxpayers' money, is under fire for blowing £200m on sponsorship deals with top sports stars including Zara Phillips, Andy Murray and Jack Nicklaus.
“Mann has called for the sports stars to volunteer to opt out of their lucrative contracts. He said: "I think it would go down very well with the British public if some of them were to cancel their contracts. Some of them would become real heroes if they did."…
6. Yahoo India News - Sun, Feb 15 09:32 PM
(http://in.news.yahoo.com/43/20090215/928/tsp-reckless-rbs-signed-sachin-others-fo.html)
Headline: 'Reckless' RBS signed Sachin, others for 200 mn pounds
“A spendthrift Royal Bank of Scotland (RBS) spent 200 million pounds on sponsorship deals with Sachin Tendulkar and other top sportsmen just weeks before being bailed out by the British government, a newspaper reported Sunday…
“The news comes after the bank announced that it had made a loss of 28 billion pounds last year.
“Treasury select committee member MP John Mann told the paper: 'They have been reckless yet again. This doesn't seem to be a bank that could do anything in moderation. It now needs to realise the golden days are over.'
Now, why am I going on and on about this seriously unwholesome sordid saga, which has obviously caused a lot of disgust and contempt for the top execs of RBS, and almost killed the brand?
Because I believe that the spin community and the brand owners need to take a bunch of lessons out of this.
A brand’s reputation is far more important and certainly more fragile than its image. The reputation is built on how it conducts business and deals with people, not just consumers and customers, but the community at large. The reputation of a bank is built over decades and the foundation of the reputation is two words – trust and respect. The first you provide to your constituents, and demonstrably so; the second you earn.
Advertising and PR won’t save a brand when both have been lost.
The TV spot which started me off on this long story teaches us that sometimes, the best thing that spin doctors can do for their clients is to tell them to lie low and say nuffink. There’s a whole world of practical wisdom in Brer Rabbit.
Saturday, March 21, 2009
Sunday, March 1, 2009
Who do you believe?
That unredeemed ornery rascal of a rock’n’roller, Bo Diddley, wrote a song which has been covered by millions of would-be rockers:
I walk 47 miles of barbed wire,
I use a cobra-snake for a necktie,
I got a brand new house on the roadside,
Made from rattlesnake hide,
I got a brand new chimney made on top,
Made out of a human skull,
Now come on take a walk with me, Arlene,
And tell me, who do you love?
Now, I have walked a few thousand miles up and down ad agency and client corridors, and once I did think of using cobra-snake-lookalike for a necktie but agency dress codes prevented me from doing so (maybe I was just plain chicken!). And now that I am out of the agency-client game, I know who I do trust, and who I would believe.
These thoughts were provoked by an ad I saw some weeks ago, in which Sachin Tendulkar was being measured for a suit, and the voice-over and supers went something like this: "
The client sign-off showed Royal bank of
RBS, RBS…that set me thinking and then rushing to my comp. I remembered having read a whole lot of bad news, real bad news about RBS from about mid 2008 till earlier this week. A little digging around and here’s some of them, the latest one first:
1. From The Guardian, Wednesday - 28 January 2009 headlined “Pay packet envy: the greed that drove the City's bonus culture; The men who made millions while the banking system crumbled” (http://www.guardian.co.uk/business/2009/jan/28/executive-salaries-banking)
It was Valentine's Day and for Sir Fred Goodwin there was a very special present. The youthful banking executive was one of elite group of Royal Bank of
The payments created a furore but Sir George Mathewson, the plain talking RBS executive who had led the eight month campaign, could not understand what the fuss was about. "They wouldn't give you bragging power in a
The bonuses helped drive RBS along its road to ruin. The bank's executives got the deal-making bug and embarked on an orgy of acquisitions, gobbling up more than 24 companies in the next eight years - culminating in the £50bn record-breaking takeover of ABN Amro just as the credit crunch started to bite.
Nine years on, the bonuses help illustrate what happens when pay deals reward risk taking and highlight the gulf in pay between boardroom bosses and those who work in the City, earning even bigger bonuses through private pay deals that do not have to be published.
"Without question my research points to the fact large companies seem to have been paid for getting bigger not better. We saw that with RBS," said Peter Hahn, a fellow in finance at
2. From The Guardian - Monday 26 January 2009 – headlined “Police asked to investigate RBS for mis-selling” (http://www.guardian.co.uk/business/2009/jan/26/police-investigate-rbs)
Police are under pressure to launch an investigation into the Royal Bank of
The Lothian and Borders force confirmed yesterday it was conducting inquiries into whether the bank fraudulently sought investment from shareholders, many of them
3. From The Guardian - Monday 26 January 2009 – “Twenty-five people at the heart of the meltdown ...” (http://www.guardian.co.uk/business/2009/jan/26/road-ruin-recession-individuals-economy)
Fairly prominent in this list is Sir Fred Goodwin, former RBS boss. Here’s what the article has to say about him:
Once one of Gordon Brown's favourite businessmen, now the prime minister says he is "angry" with the man dubbed "Fred the Shred" for his strategy at Royal Bank of Scotland, which has left the bank staring at a £28bn loss and 70% owned by the government. The losses will reflect vast lending to businesses that cannot repay and write-downs on acquisitions masterminded by Goodwin stretching back years.
4. From guardian.co.uk - January 19, 2009 – headline “Government takes 68% stake in Royal Bank of
Loss-making Royal Bank of Scotland pledged to step up lending to big corporates and lend a further £6bn to a wide range of customers as part of an agreement with the government to increase its stake in the troubled Edinburgh-based bank to 68%.
As shares in RBS lost two thirds of their value to close at just 11.9p today, the government altered the terms of the October bail out to allow preference shares - which do not carry voting rights - to convert into ordinary shares almost immediately.
5. December 30, 2008 – headlined “Thirty years on - the truth at last” (http://business.timesonline.co.uk/tol/business/columnists/article5415971.ece)
December 31, 2038: Royal Bank of
…The documents confirm speculation at the time that the Bank of England, the FSA and Mr Darling were “exceptionally worried” about the ability of RBS to roll over its short-term funding in money markets by early October.
One handwritten note from an unnamed Bank of England official to the Chancellor, dated Thursday, October 2, 2008, reads: “RBS is having enormous difficulty raising short-term funds... danger of confidence draining away completely... there is a real question over whether it will be able to open its doors for business next week.”
6. From November 29, 2008 – “Sir Fred Goodwin takes the hit as shareholders spurn £15billion rights issue by bank (http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5254438.ece)
Sir Fred Goodwin, the outgoing chief executive of Royal Bank of
As expected, the Government was left with almost all the new shares, giving it a stake of 58 per cent in the enlarged bank, after existing shareholders shunned the emergency capital-raising. Only 0.24 per cent of the new shares were taken up, some of them by RBS directors who had promised to take up their rights in full before it became apparent that the deal was a flop.
7. From guardian.co.uk – November 6, 2008 – headline “Downgrades hit Barclays and Royal Bank of
More downgrades for the banks today.
Panmure Gordon analyst Sandy Chen has repeated his sells on Barclays - down 8.5p to 187.4p - and Royal Bank of
"There has been a slew of news [on credit default swaps] recently – little of it positive. We see [Barclays and RBS] as most exposed to further losses as credit events gain momentum…”
8. From November 5, 2008 – headline “Royal Bank of
Stephen Hester, Royal Bank of
9. From October 15, 2008 – headline “Shredding credibility at Royal Bank of
Under normal circumstances, if a company expands recklessly, faces collapse and needs an emergency rescue, the very least you can do, on showing the executives responsible the door, is to clean out those non-executives who failed in their job of restraining such over-enthusiasm.
Yet I am told there is no intention to dispose of the 14 - count them - 14 non-executives at Royal Bank of
10. From Timesonline.co.uk - October 13, 2008 – headlined “Royal Bank of
The Chancellor will move to take control of the Royal Bank of Scotland today by injecting £20 billion of taxpayers’ money….Sir Fred Goodwin is expected to step down today as chief executive of the Royal Bank of Scotland (RBS). Andy Hornby, the chief executive of HBOS, also faces an uncertain future.
RBS will offer its shareholders the right to buy £15 billion of new shares, the vast majority of which are expected to be left with the Government, giving it a 60 per cent stake.
And my favourite, the killer piece of them all:
11. From The Guardian - 24 January, 2009 – headlined “Sir Fred, just say sorry” (http://www.guardian.co.uk/business/2009/jan/24/fred-goodwin-rbs)
Goodwin's descent from hero to zero is as shocking as his bank's finances. This week it was announced that the Royal Bank of Scotland (RBS) had suffered a £28bn loss - the biggest loss a company has recorded in
He had been Gordon Brown's favourite banker, until the prime minister turned on him this week, saying that RBS had been "irresponsible" under Goodwin's control (and it has to be said on Brown's watch). Over the past year, Goodwin received salary and bonuses amounting to £4.2m.
In 2002, he was named Forbes Businessman of the Year - the ultimate business accolade. Back then he was known as Fred the Shred for the incisive way he had shredded staff numbers to boost profits. Today Goodwin, who formally leaves his post on 31 January, is known as the "disgraced Fred the Red". Goodwin can take some comfort in an annual £579,000 pension.
Phew! If that’s not a litany of woes and wrongdoing, I don’t know what is. Caveat: the venom, the sarcasm, and the caustic language are there in the originals – I haven’t added anything; didn’t have to.
The RBS people in
RBS sure did change the way the game is played, and are now in the process of paying for it. They did make it happen – seriously. They did get things done, for their shareholders, their customers, and the poor sods of taxpayers out there in the
Is this the kind of bank you wish to make things happen for you?
Question 2: Why did RBS India release this ad? Surely their PR and ad agencies would have told them not to do it – if I’ve read the news articles, all that the ad will raise with me is a nasty snigger. I guess people would believe editorial more than advertising – so why do this?
The ruins of the reputation of RBS are surely made out of human skull.
Oh, in case you wondered, Sir Fred didn’t apologise. Read this:
Telegraph.co.uk - 20 Nov 2008 (http://www.telegraph.co.uk/finance/newsbysector/epic/rbs/3490576/RBS-issues-sweeping-apology-to-shareholders.html)
Headline: RBS issues sweeping apology to shareholders
Sir Tom McKillop, chairman of Royal Bank of Scotland, has issued a sweeping apology for the dramatic implosion of the banking giant.
Sir Tom told a shareholders meeting in
RBS has been attacked by employees and shareholders who have said the bank's management has not apologised for its near-collapse in October, which put tens of thousands of jobs at risk. RBS has already announced 3,000 redundancies.
Sir Tom attempted to answer that criticism, telling shareholders gathered at the Church of Scotland general assembly hall on the Mound in
RBS was told by the Government to raise an extra £20bn of capital to bolster its balance sheet. When the bank unveiled the fund raising on October 13 it said Sir Tom would step down as chairman of RBS in April, while Sir Fred Goodwin, chief executive, leaves today. Sir Fred has said he is "sad" about the dire state of the bank but so far has declined to apologise to shareholders and employees.
For he’s a jolly good fellow…
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