always Beware of geeks Darling recalls the day Sir Fred rang the alarm bell

Sir Fred Goodwin
Sir Fred Goodwin
0
Have your say

IT was the moment Alistair Darling knew something was up.

The former chancellor has described how Sir Fred Goodwin turned up on his Edinburgh doorstep one Saturday morning, bizarrely with a box of gift-wrapped Italian bread.

Along with the gift, the RBS chief executive brought unwelcome news and wanted to stress to the Chancellor the need for urgent Bank of England action.

Northern Rock had collapsed a few months earlier, but there had not yet been any suggestion that Scotland’s banks were in such dire straits.

In his book, Back From The Brink, telling the inside story of the banking crisis, Mr Darling says: “On a Saturday morning, just before Christmas [2007], I answered the door at home in Edinburgh. There on the doorstep was Sir Fred Goodwin, chief executive of RBS, holding a gift-wrapped panettone.”

He had made the short journey from his house in the Grange to the chancellor’s home in Morningside.

“I could see that he was exceedingly tense. Fred doesn’t do small talk and so we sat down and got straight to the point,” Mr Darling continues.

“His message for me was clear – unless the Bank of England put more liquidity into the system, quickly, it would seize up, inevitably leading to another bank failure. I had a great deal of sympathy with what Fred Goodwin was saying, but I asked the question ‘why were the markets singling out RBS for particular concern?’”

Sir Fred assured the chancellor that RBS had enough capital. But Mr Darling writes: “I was worried. It occurred to me that Sir Fred had not come just as a shop steward for his colleagues. He would not admit it but I sensed that RBS – which until that time had seemed invincible, its directors and senior staff exuding confidence verging on arrogance – was in more trouble than we had thought.

“After Sir Fred had set off back into the cold winter air, I rang my private secretary and told him that we should start worrying seriously about RBS and the other big banks.”

Mr Darling describes Sir Fred as “an awkward person, clearly very driven, but always warily on edge.

“Like most senior bankers who recognise that schmoozing goes with the job, he generally remained aloof on social occasions. It was as if he was there because he had to be.”

In the book, Mr Darling – whose great-uncle was an Edinburgh Tory MP and lord provost – reveals his parents stopped voting Tory after Margaret Thatcher’s 1988 address to the Church of Scotland’s General Assembly.

He writes: “My father, Sandy Darling, was an elder in the Church of Scotland, and he and my mother, Anna, voted Conservative. When Margaret Thatcher gave what came notoriously to be called her ‘Sermon on The Mound’, my father came home horrified. She didn’t quite say ‘there is no such thing as society’, but that’s what is remembered. They never voted Tory again.”

iswanson@edinburghnews.com