A NEW study into the collapse of RBS has slammed the tenure of axed boss Fred Goodwin, accusing him of destroying the bank with “economic violence”.
The report condemned the former chief executive’s “aggressive, macho management style” that created a culture where staff were locked in constant fear of losing their jobs, and his lieutenants were said to have stopped employees speaking out about problems.
RBS’s doomed takeover of Dutch bank ABN Amro, married to a piling up of toxic assets and bad debts, prompted urgent Government action that saw the bank bailed out by the taxpayer to the tune of £20 billion.
The findings form part of a damning analysis of his leadership at the Edinburgh-based bank, produced by business experts at Leicester and Newcastle University business schools.
Dr Ron Kerr, co-author of the report with Dr Sarah Robinson, said: “In the 1990s a new guard of bank managers arrived who wanted to turn banks into sales organisations, who wanted to sell financial products and to make more money.
“The danger was that they lost traditional values of prudence and became much more focused on competing with their rivals.
“That created the risk of recklessness and there was a culture of economic violence – meaning that the leadership changed to an overtly aggressive and macho management style. Failures in that leadership were a factor in what became the collapse of RBS.”
In the wake of the collapse, Mr Goodwin was stripped of his knighthood after presiding over the biggest loss in UK corporate history.
The study says: “Within RBS itself, Goodwin’s domination was maintained by economic violence. The RBS’s internal culture has been characterised as a ‘culture of fear’, specifically by 200 senior staff on an away-day in 2001 – to which the 6ft 3in Mr Goodwin responded ‘You’re not afraid of little me’.
“There were for example rituals of humiliation when managers, watched by Goodwin had to give karaoke performances. Morning management meetings, known as ‘morning prayers’ or ‘morning beatings’, were also used to humiliate senior managers.”
The authors found a shift in banking practice in the last 30 years from traditional and cautious bosses to the “insurgent modernisers” such as Mr Goodwin and his former boss and chief executive George Mathewson.
An RBS spokesman said: “As we build a new RBS, we are learning the lessons of the past.”
Last week, the News told how Mr Goodwin could face legal action over decisions he made which led to the near- collapse of the Royal Bank of Scotland.
An inquiry ordered by Business Secretary Vince Cable is said to have concluded there is “prosecutable evidence” which could be used to disqualify the disgraced former RBS chief executive and some other RBS directors from sitting on company boards in future.
In March, RBS shareholders said they would launch a £2.4 billion legal action against Fred Goodwin and his ex-boardroom colleagues.
The former RBS bosses are being accused of misleading thousands of shareholders into investing £12bn shortly before the bank’s near-collapse.
In February, the News told how RBS had spent £38 billion clearing up the mess left by Fred Goodwin. Meanwhile, it was reported today that RBS is set to receive up to £300 million less than it expected for a package of branches it is selling to Santander UK, as the business has failed to hit a number of targets outlined in the deal.