Alex Massie Alex Massie

Barclays vs RBS: A Tale of Luck and Greed

At the end of the Peter Oborne column James linked to yesterday, Peter writes:

I believe that one genuine hero has emerged from the collapse of the British banking system. He is John Varley, the Barclays chief executive who this week proudly announced that his bank would not be taking government money to stay afloat.

I admire Varley because he has fought hard to keep one of the greatest names in British banking for more than 300 years independent and out of the hands of the State.

It is a hard fight and, who knows, he may yet fail. But at least Varley is doing his best. Fair enough. But it might have been very different had Varley had his way. That is, Barclays might look at what has happened to the Royal Bank of Scotland and shudder “There but for the grace of God, go we”.

One of the questions arising from the wreckage of the British banking system is the extent to which decisions merely look terrible in hinsight and how much they were the consequence of hubris and stupidity at the time they were made. In the case of RBS, as I wrote on Friday, I tend towards the latter explanation. That is, RBS’s pursuit of ABN-Amro looks hubristic in the light of the bank’s decision to press ahead with the deal even once the parts of ABN-Amro RBS most wanted (LaSalle) were off the table.

But that doesn’t let Barclays off the hook. After all, they wanted to buy ABN-Amro too and, had they succeeded, would surely have been left with the same mess RBS (and Fortis) discovered once they took control of the Dutch bank.

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