Number 35, St Andrew Square in the heart of Edinburgh’s New Town has no name plate or corporate signage. It is an anonymous executive office used by Sir Fred Goodwin, Royal Bank of Scotland’s now-departing chief executive, for discreet meetings away from the bank’s out-of-town campus headquarters at Gogarburn. From its elegant Georgian first- floor windows you can look out along the timeless thoroughfare that is George Street, past the scrubbed sandstone of Standard Life — Edinburgh’s archetypal investment institution — to some of the city’s most expensive boutiques and auction houses.
Last week Number 35 was closed, and along George Street few were lingering at the shop windows. This reticent and undemonstrative city does not do Crash, even when it has just lost the two banks that have guarded the wealth of its citizens for over 200 years.
On the day of the so-called ‘Brown bank rescue’, which pronounced RBS and HBOS effectively nationalised, the selling of bank shares did not let up. Instead, it resumed with even greater ferocity. By the close of business, a further £13 billion of equity value in the two companies had evaporated. This was not just a humiliation for Scotland’s banks. It was, for a country that has set so much store by its reputation for prudence in banking and investment, a financial Culloden.
The banks came by different routes to their downfall. Halifax Bank of Scotland was not just caught racing to build mortgage market share right at the peak of the housing bubble, but its corporate lending arm was also found overexposed to the construction and commercial property sectors. Far from business diversification, it seemed to have doubled the bet on housing.
At RBS, Goodwin had built the bank through nine years of tumultuous acquisition into a global brand of which Scots were proud.
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