SignetJuly 2012 - Issue 03 magazine The magazine of The Society of Writers to Her Majesty’s Signet SUMMER BALL 2012 SCOTland’S BANKS IAN FRASER and JEREMY PEAT p. 6 PLUS LORD MACKAY The Monarch of and the Writers CLASHFERN p. 22 p. 14 EXCLUSIVE INTERVIEW The Scottish Sale August 2012 Edinburgh Part I We are delighted to announce the dates of our annual Monday 20 August Scottish Sale. In 2011 Bonhams Scotland were market leaders Scottish Paintings in Scottish Art, achieving outstanding results for Colourist pictures, Jewellery, Whisky and many other fields of Scottish Part II interest. Wednesday 29 & Thursday 30 August Furniture, Clocks, Works of Art, Books, Maps, Arms and 0131 225 2266 Armour, Jewellery, Silver, Ceramics, Glass and Whisky. [email protected] John Duncan Fergusson, RBA (British, 1874-1961) Head with White Rose £15,000 - £20,000 International Auctioneers and Valuers - bonhams.com/edinburgh SignetJuly 2012 - Issue 03 magazine The magazine of Contents The Society of Writers to Her Majesty’s Signet Summer Ball 2012 / 4 Deputy Keeper’s Letter / 5 Caroline Docherty EDITOR Robert Pirrie SCOTLAND’S BANKS PRODUCTION AND MARKETING Loss of trust / 6 Claudia Marshall Ian Fraser CONTRIBUTORS Karen Baston, Stewart Inside the rise and fall of RBS / 11 Brymer, Caroline Docherty, Ian Fraser, Randy Gordon, David Halliday, James Jeremy Peat Mure QC, Jeremy Peat, Robert Pirrie LORD MACKAY OF CLASHFERN ACKNOWLEDGEMENTS From the Highlands to High Office / Lord Mackay of Clashfern KT, 14 Lord Cullen of Whitekirk KT Interview by Robert Pirrie DESIGN The WS Society In camera / 20 PRINTING Minuteman Press PUBLISHER The WS Society Her Majesty’s Signet / 22 Karen Baston LETTER FROM AMERICA / 24 Randy Gordon THE SOCIETY OF WRITERS CELEBRATING WILLIAM ROUGHEAD WS TO HER MAJESTY’S SIGNET Roughead’s friends / 26 Oscar Slater: what happened... / Deputy Keeper of the Signet 28 CAROLINE DOCHERTY WS Karen Baston Office Bearers LEGAL PRACTICE SIR ANDREW CUBIE CBE WS Transfer of property / 30 JAMES RUST WS Professor Stewart Brymer WS RODERICK BRUCE WS BRUCE BEVERIDGE WS Modern construction of contracts / 32 AMANDA LAURIE WS James Mure QC Chief Executive Signet Accreditation / 34 ROBERT PIRRIE WS David Halliday Director, Professional Services SOCIETY ANNA BENNETT WS McVey Napier WS / 36 Director, Business Services Karen Baston CLAUDIA MARSHALL Keeper of the Signet THE RIGHT HON LORD MACKAY OF CLASHFERN KT Signet Magazine / 3 WS SUMMER BALL Members and guests danced the night away at the WS Society’s Summer Ball in May. After dinner, Callanish played both contemporary and Scottish country dance music which kept the dance floor full all night long. The atmosphere was relaxed, with a touch of glamour. 4 / Signet Magazine Deputy Keeper’s Letter expect that most members The next opportunity will be when will have been as fascinated the Pommery Champagne Café Bar as I was by the excellent is once again in the Lower Library BBC documentary RBS: for the duration of the Edinburgh Inside the Bank That Ran Festival Fringe. And, of course, by Out of Money, though I had next year we hope that there will a particular interest, as be a more permanent opportunity my late father, a chartered for members to bring guests to the banker of the old school Library for coffee or a light lunch, as and latterly a senior the space once again becomes a centre manager, had spent all his working life for meeting and working in a way that with RBS. I doubt anyone could have suits the practices of the 21st century, Ibeen more proud of that institution, while respecting the past. but before his death in 2008 he had begun to express doubts about the I spoke in the January edition of leadership of “Fred the Shred” who the magazine about the role of DKS was “not a banker”, and the board not being all dinners and champagne, that ought to have been reining in and here we are again, with evidence his more obvious excesses. I know on these pages that might lead you to that you will enjoy the articles in this think otherwise. Pride has obviously edition by Ian Fraser, lead consultant developed as the theme of this letter, on, and Jeremy Peat, contributor to, and proud as I am of my membership that documentary. That I write this of the Society and role in it, that is as as the LIBOR rate-fixing scandal nothing compared to my pride at the unfolds just adds piquancy to the story. proficiency in Scottish country dancing being shown by my husband, Neil, in On the topic of pride, I have the photograph on the opposite page. mentioned before the important role it Little did we both think, as we were plays in membership of the WS Society. put through our paces in the run up Our research in the development to the “Quali Dance” as Prom Night of the Vision and Strategy document was called back then, that our primary showed that there are two sides to the school pas de bas training would come membership equation: the heart and in so handy! the head. On the heart side sits pride. We continue to build into our strategy the development of opportunities Caroline Docherty to exhibit that; for our members to Deputy Keeper of the Signet showcase the Society, what it stands for, and our magnificent building. The Deputy Keeper of the Signet is the most The “revamped” Summer Ball, held in senior membership representative of the WS May, is a good example of that, as the Society. photographs show. Many members contacted me after the event to say how much their guests had enjoyed the evening, and the splendour of the setting. Signet Magazine / 5 SCOTLAND’S BANKS Loss of trust Scottish banking was once renowned for prudential management. Today the association is rather different. Respected financial journalist IAN FRASER gives his view of events behind the collapse of RBS and HBOS and calls for a Leveson-style enquiry. 6 / Signet Magazine RBS former Chief Executive Fred Goodwin became the face of the UK’s banking meltdown. Scottish banking was once renowned for prudential management. Today the association is rather different. Respected financial journalist IAN FRASER gives his view of events behind the collapse of RBS and HBOS and calls for a Leveson-style enquiry. Signet Magazine / 7 few weeks after with banks’ balance sheets, pursuing By 2005, investors were becoming a the bailouts of quixotic yardsticks like return on little concerned that Goodwin might Royal Bank equity – and by extension enhancing have his priorities wrong. After one of Scotland their own earning-power and status – investment analyst accused him of and HBOS they clean forgot the fundamentals of being “a megalomaniac” who was more in October banking. Alarm bells ought to have interested in scale than shareholder 2008, Prime sounded long before the October 2008 value, the RBS board commissioned Minister implosions. For example when RBS PR firm Brunswick to check whether Gordon splashed out $10.5 billion on Charter this view was widely shared. It turned Brown told One in May 2004, RBS did not seem out it was. But the board shied away BBC News that: “What has happened to mind that the Ohio-based bank’s from sacking Goodwin, opting instead is we have had a banking crisis which balance sheet was stuffed with a form of to hobble him by banning further Astarted in America… This is an subprime lending. By December 2007, acquisitions. international crisis that has not been Charter One had $9.3bn of “home generated in Britain”. Brown was not equity lines of credit” (HELOCs) and o escape from the only politician to be in denial $11bn of mortgages secured by second M&A “cold turkey”, about the causes of the UK banking liens on its books. Goodwin dashed crisis. headlong into areas But unlike HSBC with its $15bn he did not really In an interview the previous month, Household Finance Corporation deal, understand, sowing as HBOS was being acquired by Lloyds Goodwin refused to acknowledge he the seeds of the TSB, Scotland’s First Minister Alex had been sold a pup. Even once the bank’s collapse two Salmond accused “a bunch of short- credit crisis was in full swing he failed years later. He gave RBS’s investment selling spivs and speculators in the to admit or accept that any of Charter Tbanking arm, led by Johnny Cameron financial markets” for causing the One’s loans were impaired. and Brian Crowe, its head. The unit Edinburgh-based bank’s narrowly went hell for leather into the US averted collapse. With the benefit of “So where is RBS on all this?” asked structured finance market, as well as hindsight, such claims were clearly John Hempton of Bronte Capital the leveraged-buyout and commercial ludicrous. For RBS and HBOS were Management in May 2008. “Answer: property markets in the UK and not laid low by short-sellers or events delusional. They have taken no charges Europe, but at the worst possible point beyond their control in the United and all the goodwill from the Charter of the cycle. States (although these may have One acquisition, which remains on played a part in tipping them over RBS’s balance sheet unimpaired”. RBS Greenwich Capital, the the edge); they failed because of the bank’s Connecticut-based structured stupidity, hubris and greed of their Hubris was already starting to get finance arm, became one of the management. the better of Goodwin. He splashed leading players in collateralized debt ONE ANALYST ACCUSED GOODWIN OF BEING A “MEGLOMANIAC”. In a report published last out £18m on a private jet, £6m on obligations (CDOs) (which basically December, even the FSA blamed the the conversion of a St Andrew Square meant it “structured” or “engineered” Edinburgh-based bank’s collapse town house, £350m on a campus- teetering debt built on a foundation on factors including the “significant style headquarters at Gogarburn and layer of subprime loans issued to US weaknesses in RBS’s capital position”, $400m on a US headquarters with the consumers with little propensity to pay “over-reliance on risky short-term world’s largest trading floor.