Editing Fred Goodwin (section)

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Goodwin's strategy of aggressive expansion primarily through acquisition, including the takeover of [[ABN Amro]], eventually proved disastrous and led to the near-collapse of RBS in the October 2008 [[2007–2008 financial crisis|liquidity crisis]]. The €71&nbsp;billion (£55&nbsp;billion) ABN Amro deal (of which RBS's share was £10&nbsp;billion<ref name="scotsmanoct08goodwin">{{cite news|url=http://thescotsman.scotsman.com/latestnews/Fred-Goodwin-The-39boy-from.4587548.jp|title=Fred Goodwin: The 'boy from Paisley' who found himself at centre of a global storm|date=14 October 2008|work=The Scotsman |location=UK|access-date=14 October 2008}}</ref>) in particular stretched the bank's capital position – £16.8&nbsp;billion of RBS's record £24.1&nbsp;billion loss is attributed to writedowns relating to the takeover of ABN Amro.<ref name="guardian26feb09"/>

It was not, however, the sole source of RBS's problems, as RBS was exposed to the liquidity crisis in a number of ways, particularly through US subsidiaries including [[RBS Greenwich Capital]]. Although the takeover of NatWest launched RBS's meteoric rise, it came with an [[Investment banking|investment bank]] subsidiary, [[NatWest Markets|Greenwich NatWest]]. RBS was unable to dispose of it as planned as a result of the involvement of the [[NatWest Three]] with the collapsed energy trader [[Enron]]. {{Clarify|date=February 2012}} However the business (now [[RBS Greenwich Capital]]) started making money, and under pressure of comparison with rapidly growing competitors such as [[Barclays Capital]], saw major expansion in 2005–7, not least in [[private equity]] loans and in the [[Subprime lending|sub-prime mortgage]] market.<ref name="sundaytimes8feb09"/> It became one of the top three underwriters of [[Collateralized debt obligation|collateralised debt obligations]] (CDOs).<ref>''[[CNN]]'', 22 April 2008 [https://money.cnn.com/2008/04/22/news/newsmakers/rbs.goodwin.fortune/index.htm?postversion=2008042212 "RBS chief gets off scot-free"]</ref> This increased exposure to the eventual "credit crunch" contributed to RBS's financial problems.

The third contributor to RBS's problems was its liquidity position. From a position around 2002 where the bank was essentially 'fully funded' (i.e. was funding its lending positions fully from deposits gathered from customers), the rapid growth in lending within the GBM (Global Banking and Markets) division led to a reliance on external wholesale funding.  The combination of this, along with the weak equity capital position, and the massive exposure to losses on CDOs via Greenwich, were the factors that destroyed RBS.<ref>[http://www.slate.com/id/2205753/ Who's the world's worst banker?] by [[Daniel Gross (journalist)|Daniel Gross]], ''[[Slate (magazine)|Slate]]'' magazine]</ref> The bank experienced severe financial problems, and attempted to shore up its balance sheet with a £12&nbsp;billion share issue in April 2008, one of the largest in UK corporate history.<ref name="independent14oct08"/> The attempt to raise an additional £7&nbsp;billion capital by selling off insurers Churchill and Direct Line failed due to lack of interest in the context of the global liquidity crisis.{{citation needed|date=June 2020}} RBS was forced in October 2008 to rely on a [[2008 United Kingdom bank rescue package|UK Government bank rescue package]] to support a shareholder recapitalisation of the bank, which resulted in the government owning a majority of the shares. Following two [[rights issue]]s in 2008, Goodwin resigned as Chief Executive.<ref name="independent14oct08"/>

On 13 October 2008, as part of the arrangement for government support (of which Goodwin said "This isn't a negotiation, it's a drive-by shooting"<ref name=times20jan09>''[[The Times]]'', 20 January 2009, [https://archive.today/20110612114058/http://business.timesonline.co.uk/tol/business/economics/article5549510.ece Hubris to nemesis: how Sir Fred Goodwin became the ‘world’s worst banker’]</ref>), it was announced that Goodwin was to stand down as CEO, to be replaced by [[Stephen Hester]].<ref name="scotsmanoct08goodwin"/><ref name="chiefs-quit">{{cite news|url=http://news.bbc.co.uk/1/hi/scotland/7666647.stm|title= Bank chiefs quit after rescue bid |date=13 October 2008|work=BBC News|access-date=14 October 2008}}</ref> Goodwin formally left RBS on 1 January 2009.<ref name=telegraph260209>''[[The Daily Telegraph]]'', 26 February 2009, [https://www.telegraph.co.uk/finance/newsbysector/banksandfinance/4840512/Sir-Fred-Goodwin-refuses-to-return-pension.html Sir Fred Goodwin refuses to return pension]</ref><ref name="auto">{{Cite web |title=Final days of Fred Goodwin's RBS reign revealed |url=https://www.scotsman.com/business/companies/financial/final-days-of-fred-goodwin-s-rbs-reign-revealed-1-3087747 |website=www.scotsman.com|archive-url=https://web.archive.org/web/20191228161908/https://www.scotsman.com/business/companies/financial/final-days-of-fred-goodwin-s-rbs-reign-revealed-1-3087747 |archive-date=28 December 2019 }}</ref>

The share price, when Goodwin became CEO of RBS, in January 2001, was 442p. After reaching £18 a share (equivalent to £6 per share after each share was split into three in May 2007<ref>{{cite web|url=http://www.iii.co.uk/investment/detail?code=cotn:RBS.L&display=discussion&id=3555819&action=detail|title=Discussion|website=Interactive Investor}}</ref>), on the day of his departure it was announced that the share price was 65.70p<ref name=autogenerated3>The Scotsman, 14 October 2008, [http://news.scotsman.com/latestnews/Fred-Goodwin-The-39boy-from.4587548.jp Fred Goodwin: The 'boy from Paisley' who found himself at centre of a global storm]</ref> reflecting [[share repurchase|share buyback]]s, rights issues as well as market valuation. Despite these developments, the ''[[Daily Telegraph]]'' insisted that "his grasp of finance is in the Alpha class" and that he was "unlikely to be in the growing queue of jobless bankers" for long.<ref>''[[The Daily Telegraph]]'', 12 October 2008, [https://www.telegraph.co.uk/finance/newsbysector/banksandfinance/3185253/Sir-Fred-Goodwin-shredded-by-ABN-takeover.html Sir Fred Goodwin shredded by ABN takeover ]</ref> In 2008/9, the RBS group was effectively nationalised: the [[Government of the United Kingdom|UK Government]] owns nearly 70% of the ordinary shares of the company owing to its enormous debts. By January 2009, the share price was more than 98% down from its February 2007 peak.<ref name="journal26jan09"/>