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Banking

Abigail Hofman: Abigail and the Confessional

"Why did I tell you that? Please, please forget that I mentioned it," a chief wailed.

Why has Fred the Shred not been shredded? Sir Fred Goodwin, chief executive of Royal Bank of Scotland, still has a job despite several misjudgements. Other bank chief executives have had the grace to exit rapidly so why is FG ('Frankly, get on with it') still clinging to power by his toenails? Will it take an earth-mover to remove him?


The facts are well rehearsed. Fred, who gained the "shred"moniker because of his cost-cutting prowess, bid for anaemic ABN Amro at the absolute peak of the cycle for financial assets. At the time, a respected investment bank chief said to me: "Is there value in that acquisition, Abigail? Banking is all about people and do we know anyone outstanding who's still working at ABN?"


Fred did not act alone. He was part of an audacious triumvirate that included the European banks Fortis and Banco Santander. However, I always had the impression that for Fred this deal was personal. Because, of course, the rival bidder was another UK bank, Barclays. Barclays and RBS were ferocious competitors, especially in investment banking, where they both have the same fixed-income-focused model.



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