When watching the documentary about the Royal Bank of Scotland about the financial crisis it became apparent that Fred Goodwin was a bit “over his head” in terms of not wanting to listen to other professional opinions when he become CEO and pushing RBS to buy too much.
Fred managed to be able to convince RBS to buy around twenty mergers and acquisitions in a few years which to be fair was a good idea and made the bank grow but the financial crisis of 2007 would then prove problematic as it saw their investments not working out which had then to involve the government to bail them out using tax payers money. This obviously did not impress the people at all. Fred biggest mistake was not looking into details of finances which is odd because that is what he was known for. It was odd that they were looking to invest a very large sum of money into a business without doing due diligence and look into the finer details and calculate all the risks and possibilities. This left them very vulnerable if a hard time were to occur and as the world knows it and felt the financial crisis of 2007 was a very big one. It’s interesting to note that just spending money on expanding, acquiring new mergers and acquisitions does not translate into success and left RBS with a lack of focus to the bigger picture. Investing in business that are not fully investigating including their markets and forecast prediction by industry experts shows a lack of respect towards their shareholders.
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