Re the Standard piece below. I received this letter from a senior dealer after first writing about the know-nothing autocratic culture at RBS in the Observer here. The link between conformism and buisness failure is all too obvious. For the usual reasons I have cut out anything which might identify the writer.
(ADD See also The banks couldn’t contain dissent by Anthony Evans in the Guardian, and…
…Stalinist companies vs market forces by the wise Chris Dillow. It includes the great line “if centrally planned economies are a bad idea, how come centrally planed companies are a good one?” )
Nick, I worked for RBS in a senior trading position from 2004-2008 in Asia and just read your article. You ABSOLUTELY nailed it. The business I was involved in was very complex, and I highlighted frequently to local and global bosses that our underinvestment in technology would be our demise sooner or later. I recall after my presentation, I was taken aside and told that my “Attitude needed improvement”. The executive was so focused on the low cost income ratio and the ‘RBS magic’ which made it possible, they refused to even admit there might be consequences to this crazy strategy.
I remember a document in 2007 titled “The Rates Review” which indicated how poor our systems were and how they were going to fall apart if tens of millions wern’t invested immediately – that was BEFORE the ABN merger. This report was quickly buried and the authors disappeared before they
could raise a stink.
The rank and file of RBS knew the ABN purchase was a completely insane strategy, so we watched in awe as the place slowly fell apart. RBS however wasn’t full of idiots – they were just concentrated in the
The real interesting question you may want to analyze should be how it could be that a bunch of idiots were allowed to take over and run the bank unchecked. In my view ‘critical mass of incompetence’ was reached somewhere in 2006 and at that point the future demise was inevitable.
I believe the answer to how this all happened lies in the culture at the senior level. It would be a very interesting investigation to see exactly how this culture led to management ignoring rank and file.
Again – thanks for the great article.