RBS paid £49bn for ABN AMRO at the worst moment — then a £45bn bailout

Royal Bank of Scotland began as a Scottish retail lender. Under CEO Fred Goodwin — later nicknamed 'Fred the Shred' for his cost-cutting — RBS grew aggressively through acquisitions, buying NatWest for £21bn in 2000. By 2007 it was the largest bank in the world by balance sheet, a position built on short-term wholesale borrowing and serial dealmaking.

The fatal deal came in October 2007. RBS led a consortium with Fortis and Banco Santander to buy Dutch bank ABN AMRO for €71bn (£49bn). RBS contributed roughly £10bn of the total. The acquisition was financed largely through debt and short-term funding. Within months the global credit crisis froze interbank lending — the very market RBS relied on to fund itself.

By April 2008 RBS had written down £5.9bn in bad assets. In January 2009 the bank announced a pre-tax loss of £24.1bn — the largest in UK corporate history — including £20bn in goodwill writedowns tied to ABN AMRO. The share price collapsed from a 52-week high of 354p to 10.9p in a single day, a 97% decline that wiped out shareholders.

On 13 October 2008 the UK government announced a £45bn recapitalisation of RBS, effectively nationalising the bank. The state's stake initially stood at 57% and rose to 84% by 2009. Fred Goodwin resigned in October 2008. He was stripped of his knighthood in 2012 after a parliamentary report found his leadership was 'a catastrophic failure of management.' The bank cut over 30,000 UK jobs in the years that followed.