Sir George Mathewson: Royal Bank of Scotland saviour takes his final curtain call

A day in the life of ... the departing chairman, Royal Bank of Scotland
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Sir George Mathewson is a plain talking, no nonsense Scot not given to public shows of emotion or sentimentality. Yet he'd need a heart of stone not to shed a tear on a day like today. For this is Sir George's last day in the office, and also the day of his final annual general meeting as chairman of Royal Bank of Scotland Group. Next year, he'll be just another humble shareholder. It's a day for reminiscing.

Sir George leaves his Perthshire home for the one-and-a-half-hour drive to Gogarburn on the outskirts of Edinburgh, the site of RBS's swanky new head office. It's a beautiful spring day, the air is clean and crisp, and the sun is rising from behind distant hilltops. Not for the first time as he takes in the scenery around him, Sir George thanks his lucky stars he was born a Scot.


Sir George arrives at Gogarburn and engages in a flurry of preparation for the forthcoming board and annual general meetings. When Sir George joined RBS as director of strategy nearly 20 years ago, the bank was but a small regional player which was fast slipping into the sea. It was only a matter of time, everyone said, before it would be gobbled up by one of its larger rivals south of the border. Not if Sir George, with his Scottish Nationalist sympathies, had his way, it wouldn't. This firebrand of the Scottish Development Agency may not have been a banker by background, but he knew how to energise an organisation, and as he had demonstrated by transforming the SDA into the most successful inward investment agency in Europe, how to dream the impossible and make it happen. Today, RBS is Britain's second largest bank after HSBC, with extensive interests both in Europe and the US. From minnow to great white shark in just 20 years. Profits were just £32m when Sir George became chief executive in 1992. Last year, he made £8.3bn. Market capitalisation has grown from £1.6bn to £60bn. Not bad, not bad at all.


Sir George is driven to the conference centre in Edinburgh where today's board meeting and later, the annual general meeting are set to take place. What a journey it has been. In his first three years at RBS, Sir George was forced to learn the hard way what banking was all about. Yet even a non banker could see that this was a bloated and inefficiently run organisation which relied heavily for its raison d'etre on an outdated sense of entitlement.

His experience in those years was to prepare him for what he found years later when RBS acquired National Westminster Bank. RBS in the late 1980s and early 1990s was similarly living in a bygone age.

By 1992, Sir George had had enough of fence-sitting. The time had come for action. In he went, over the chief executive's head, to the chairman, then Sir George Younger, with a proposed "rescue plan" - later dubbed Project Columbus. If we don't take urgent action now, he warned, it will be the end of the road for RBS. Gazing out of the window at the Edinburgh traffic, Sir George can still remember the moment vividly.

It was the day Margaret Thatcher had announced, on the steps of the British embassy in Paris, that she would fight on in the battle to unseat her as Tory Party leader. Even as she spoke, everyone knew she was finished. But where was Sir George Younger, her campaign manager? He was up in Edinburgh, dealing with Sir George Mathewson's coup d'etat. While Mrs Thatcher was being knifed by her own party, Sir George Mathewson was busy knifing his chief executive with her campaign manager.


The board meeting gets under way. This is indeed an emotional affair for Sir George. Surrounded by so many familiar faces, it's hard to concentrate on the matters in hand - Peter Sutherland, chairman of BP and of Goldman Sachs International, Angus Grossart, stalwart of the Edinburgh financial scene, Sir Iain Vallance, former chairman of British Telecom, and, of course, Sir George's trusted lieutenant, Fred Goodwin, now chief executive of the group. All companions in some shape or form on this great adventure.

There's only one obviously missing fellow traveller - Emilio Botin, president of Grupo Santander and a key support to Sir George during his assault on National Westminster Bank.

The relationship goes back years to the two banks' roots as insignificant regional players on the global banking scene. They have grown up together, and the relationship is still one of deep mutual affection and respect.

Yet the two were forced to disentangle their cross-shareholdings and directorships when Santander bought into the British market through the acquisition of Abbey National. Sir George still misses the annual general meetings of his Spanish counterpart, with their tendency to go on not just for hours but all day. In Spain, he reflects, powerful bankers are treated like Gods, feted, respected and courted wherever they go. Fat chance of that here in Britain.


Sir George mingles with shareholders assembling for the annual meeting. By the late 1990s, Sir George was beginning to dream of the transformational deal, the transaction that would underwrite RBS's position as an independent Edinburgh-based bank into the indefinite future and endow him with the size necessary to play the global banking game. With the possible exception of Lloyds TSB, the English clearers seemed asleep at the wheel and ripe for the taking. For choice, Sir George would have gone for Barclays, then the bank with the most obviously under-exploited franchise. The Barclays board was in turmoil. There could scarcely be a better time to pounce. Yet Sir George's advances were spurned. There was no appetite for his skills in the City. You can have NatWest if you like, the English financial establishment seemed to be saying to him, but Barclays is sacrosanct. You are not to touch it. The story is possibly apocryphal, but Sir George is said to have been warned off by the Governor of the Bank of England, no less.


An uneventful agm, marked by some affectionate tributes, ends with a standing ovation. Sir George glances over at Fred Goodwin, known in the press as "Fred the Shred" on account of his ability to cut costs and get things done. There have been mutterings in the City about Fred's autocratic style. He's even been called an empire-building megalomaniac who thinks nothing of shareholder value. Sir George knows differently. There is not a banker in Britain who has managed to create as much value as Fred Goodwin did after the NatWest takeover. Yet on the night of their victory, they had celebrated alone together over ice cream at the Savoy - no parties, no fawning advisers - with Fred already restlessly planning the gruelling task ahead.

What a victory it had been, filled with all the drama of a classical Greek tragedy. To begin with, Royal Bank of Scotland planned to bid for NatWest jointly with Bank of Scotland, its main rival north of the border. Both of them wanted the prize, and to beat the other into a pulp to get it seemed silly. It was never to happen. As Sir George bluntly told his opposite number at BoS, Sir Peter Burt: "Rational self interest would dictate we bid jointly lest we end up making the other one overpay - what the City calls the winner's curse. The sad truth is that like clan chieftains, we are destined to fight". To the victor the spoils.


A party of friends, senior colleagues and assembled members of the great and the good gets under way back at Gogarburn. Someone suggests to Sir George that he must have been inundated with job offers. Yes indeed, Sir George modestly admits, but nearly all of them he's turned down. "I don't want to wake up on a beautiful morning in Perthshire and have to catch the early morning flight down to London". Well, who would?