BOOK REVIEW: Making it Happen by Iain Martin

Here's an amazing fact: RBS was briefly the largest bank in the world by assets in 2007. The problem: for banks, assets means money they're owed and well, the RBS downfall is now legendary. Subtitled "Fred Goodwin, RBS and the men who blew up the British economy" Iain Martin traces how things went so wrong for this once esteemed bank and its equally esteemed CEO. Worth reading? Yep - it's a pacy page-turner that reads like a thriller and gives the inside scoop on how RBS almost brought down the British economy.

BOOK REVIEW: Making it Happen by Iain Martin

So…. how exactly did the Royal Bank of Scotland which later became known as the snappier RBS wind up being such a mess it nearly capsized the British economy before being thrown a life jacket stuffed with taxpayer billions to keep it afloat?

That’s the question Martin looks to answer in a book that’s as gripping as a thriller. It starts in early October 2008 when economic Armageddon is hours away and sleep-deprived bankers and the government are scrambling to think of a fix. Quickly.

How did this happen?

First, there’s the CEO. Now, most us have heard of Fred Goodwin, the fallen CEO of RBS who, as Martin observes, became almost a “pantomime villain” of the financial crisis, someone we could point and hiss at. Certainly he doesn’t come out of the book well, painted as a details-obsessed, target-driven bully with a limited grasp on some areas of banking. He was an accountant by profession who started his banking career as CEO of the small Clydesdale bank (talk about starting at the top). Within five years he was CEO of RBS, one of the largest banks in the world which is a pretty meteoritic rise by anyone’s standards but then, one thing all those who knew Goodwin agree on is that he’s an extremely intelligent and ambitious man.

Unfortunately, most of Martin’s sources also agree, he was a nightmare of a manager. Senior managers were subjected to regular withering tirades and cross-examinations on minute details. Goodwin expected his team to meet ambitious targets and goals for growth. A micro-manager in many respects, he was eagle-eyed on the numbers and such things as the colour of the carpets in the new £350million headquarters he had built, but not so clear on the strategy of, say, the investment bank.

So Goodwin shoulders a lot of the blame but he wasn’t working in a vacuum and in working out how RBS got to the point it did, Martin traces the bank’s sometimes colourful history. Founded in 1727, RBS was part of a once proud tradition of Scottish banking. By the 1980s, however, it was small time, ragged round the edges and in danger of being taken over. Cue the entrance of Sir George Mathewson, a patriotic Scot, who designated Goodwin as his successor. As CEO, Mathewson was the one who shook RBS up in the early 1990s, making it a sleeker, more competitive machine and introducing a sales culture. Profits shot up; it was time to take things to the next level.

Goodwin came on board in 1998 as deputy CEO and the piece de resistance of the collaboration between mentor and mentee was the £20 billion takeover of the much bigger Natwest Bank which swung RBS into the big league. Goodwin became CEO of RBS in 2001, high on this success, as Mathewson switched to the chairman’s seat.  “Make It Happen” was the RBS slogan and Goodwin and Mathewson were doing just that.

Eye-popping fact: RBS’s takeover of ABN Amro in 2007 made it the world’s biggest bank by assets

In the following years, as RBS continued its mega growth, no-one reined in the ambitious CEO despite a couple of dud buys – not the Chairman, not the Board, not the regulators. In fact only a couple of people, such as the risk manager who left RBS after six weeks, horrified, really leave this sorry tale looking good. The New Labour Government, and Gordon Brown in particular, are criticized for creating an environment which let RBS thrive with Brown’s infamous prophesy that the times of boom and bust were over scathingly dismissed by Martin as “delusional drivel”.

By 2004 there were the odd mutterings about the way RBS was being run but no action. In 2006 the US housing market started to collapse and by 2007 the financial world, heavily exposed to the US market was beginning to suffer. RBS’s investment bank had embraced exotic in derivatives but it was RBS’s purchase of the Dutch bank, ABN Amro, in 2007 which was riddled with sub-prime debt, that led to meltdown. RBS had jostled with Barclays to takeover ABN Amro and, in October 2007, won which made RBS the biggest bank in the world by balance sheet, a balance sheet full of junk toxic assets. RBS also owned the Irish Ulster Bank which was exposed to the crashing property market in Ireland. So RBS failed at both ends of the spectrum – in the traditional property lending end and the fancier complex instrument trading of investment banks.

Eye-popping fact: RBS’s share price dropped by 25% during one presentation

All of which meant that by 8 October 2008 RBS was sinking fast and in a book stuffed full of eye-popping facts, Martin tells us that during one presentation the RBS’s share price dropped by 25%. The fix for RBS ended up being a Government £45.2 billion buy up of RBS shares and billions more support offered in credit facilities and no-one has felt good about it.


The fall of Goodwin has been of epic proportions. In the good years he was feted as a financial hero:

  • Forbes’ Global Businessman of the Year in 2002,
  • knighted in 2004 for services to banking,
  • dining with the most powerful men – including the US President – of the world.

Since the collapse of RBS, he’s been:

  • named “world’s worst banker” by Newsweek magazine
  • pressured by the Government into accepting his annual pension of £703,000 be halved to £342,500,
  • stripped of his knighthood.

You could call it a modern day tragedy except it’s not clear there was ever greatness either in Goodwin or any of the other men exposed by the crisis to make the fall so tragic. These financiers and politicians have not shown they were Hamlets or Othellos: great men with a tragic flaw. The truth is far more suburban.

Due to a combination of factors that came together but weren’t understood at the time the economy – and banks – boomed during this period and these men happened to be at the helm. But human nature being what it is, these good times were not put down to good fortune: they were self-attributed to the genius of the bankers and the virtuoso skills of the politicians and central bankers who took credit for ending boom and bust cycles.

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