Robertson backs RBS on 'domination by Scots'

THE simmering behind-the-scenes row over the Royal Bank of Scotland's "domination by Scots" flared in public last night after embattled executives at the company won the wholehearted support of a former Cabinet minister.

Lord Robertson claimed that some of the recent commentary on the management of RBS sparked by the recent £12 billion rights issue plans had "bordered on the hysterical".

The former defence secretary heaped praise on RBS chief executive Sir Fred Goodwin and the bank's chairman, Sir Tom McKillop, both of whom have faced severe criticism for their handing of the ABN Amro take-over and the subsequent refinancing plans.

Goodwin and McKillop were "the most talented leaders in their industry" who had turned RBS into a global player, Robertson said.

He claimed that, because of this, they had the right to expect support as they lead the bank through credit crunch-induced problems.

Robertson added: "I think that Fred Goodwin and Tom McKillop have earned that right and it is time that the hysterics were told to calm down."

There has been continued speculation that both Goodwin and McKillop may be forced out by pressure from institutional shareholders, angry about the fall in the price of their holdings since the ABN takeover.

Robertson's remarks coincide with increasing criticism of RBS which is seen by some in the City as too dominated by Scots.

Supporters of BRS have been infuriated by some of the comments about Goodwin and McKillop and their nationality.

One said: "If in some of the comments made by City sources and in the media you replaced the word Scottish with Jewish or Asian, imagine the reaction.

"Perhaps the Scots have been too tolerant of this in the past but it has raised its ugly head this week and it cannot go unnoticed."

An internet profile of Goodwin which began by referring to him as "the son of a reputedly fierce Scottish Protestant and a German Jew" particularly angered his supporters in Scotland. The phrase has subsequently been withdrawn.

Last night Robertson's support was echoed by Owen Kelly, the chief executive of Scottish Financial Enterprise.

Kelly said: "RBS is a global bank in every sense. It is, literally, a company on whose activities the sun never sets and it is a highly internationalised business.

"That such a world-beating company should originate in Scotland, with our unmatched history of financial innovation and success, should surprise no-one."

However, the support for the RBS leadership and the bank's Scottish identity, failed to convince some in the City.

One well-placed source told The Scotsman: "It is important for Scottish companies to make the distinction between business and patriotism."

The row flared amid reports that a private equity consortium was being formed to examine a possible bid for RBS's insurance assets. Kohlberg Kravis Roberts and Apax Partners are expected to lead any consortium bid, with Lehman Brothers also involved.

• RBS announced yesterday that it will hold a general meeting on 14 May to seek the backing of shareholders for the rights issue.

At the same meeting, the company will seek approval to issue new ordinary shares instead of the 2008 interim dividend.