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RBS admits ABN Amro “bad mistake”

The former chiefs of RBS have admitted that the purchase of Dutch bank ABN Amro in 2008 was a “bad mistake”.

At today’s Treasury Select Committee, former RBS chairman Sir Tom McKillop and former chief executive Sir Fred Goodwin admitted that the acquisition of ABN Amro helped towards the bank’s near demise.

Jim Cousins said: “How much did you overpay for ABN Amro?”

McKillop replied: “In retrospect we bought ABN at the top of the market, so everything we paid was not worth it. I could say 50 per cent but what difference would it make? We are sorry we bought ABN Amro.”

Both McKillop and Goodwin could not put a figure on how much RBS will have to write down to cover loses made thanks to the acquisition.

McKillop says: “A significant part of the goodwill write-off, £15bn, is ABN Amro, but I couldn’t tell you how much we lost on ABN. I would basically submit that the bulk of what we paid for ABN Amro, which was £10bn, will be written off.”

The former chairman denied that the decision to buy the bank was Goodwin’s, he said the board had 18 meetings and were unanimously agreed to go ahead with the buy up.

Cousins said: “Mr McKillop, how would summarise the deal? I am asking you, you were in charge of this board, you have destroyed a great British bank and you have cost the taxpayer £20bn.”

“It was a bad mistake, at the time it didn’t look like that,” replied McKillop.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Peter L. Griffiths 24th January 2012 at 3:17 pm

    The Royal Bankof Scotland took over ABN Amro on 9 October 2007. ABN Amro was the holding company of several American banks connected with Fannie Mae, and for this reason had invested in mortgage backed securities,known as toxic assets. From 19 September 2008,it was United States government policy to get rid of these toxic assets from the balance sheets of American Banks. The tarp bailout was approved by the US President on 3 October 2008, but apparently it did not seem to benefit the American banks acquired by the Royal Bank of Scotland. This failure seems to have led to the British bailout of the Royal Bank of Scotland on 13 October 2008.

  2. Peter L. Griffiths 2nd February 2012 at 6:49 pm

    Further to my comment of 24 January 2012, both McKillop and Goodwin need to explain why RBS is not suing the issuers of the toxic assets for fraud, or at least identify these issuers.

  3. Peter L. Griffiths 17th February 2012 at 5:26 pm

    Apparently in April 2011, the Royal Bank of Scotland issued mortgage backed securities to the world’s banks. Why was this not stopped by the British Financial Services Authority?

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