The Royal Bank of Scotland: the bank that ran out of money

Once coined the largest bank in the world, The Royal Bank of Scotland (RBS) had to be bailed out
by the government in 2008. This spectacular bailout by the British taxpayers to rescue RBS
could be partly ascribed to the bank’s rather lax corporate governance system. Although trust in
the bank’s leaders was being questioned for some time, the true extent of the problems faced by
RBS only became evident in 2008.

View the documentary RBS - Inside The Bank That Ran Out Of Money about the extraordinary rise
and downfall of the Royal Bank of Scotland (RBS).
http://www.youtube.com/watch?v=st40Gps08KI
https://youtu.be/a0EdYP9uvso
Assignment
You are an analyst working for the OECD and are asked to evaluating the corporate governance
of banks in light of the unique case of the Royal Bank of Scotland. More specifically, your
evaluation should address the following issues:
 Provide a brief overview of the rise and downfall of RBS.
 In light of the RBS case, analyse the agency relation(s) in banks more generally.
o Think about the variety of stakeholders banks have.
o Make sure to pay attention to the diversity of conflicts of interest present in
banks that may fuel agency problems.
 Provide an assessment of the corporate governance challenges that allowed the scandals
at the RBS to occur.
 In light of the RBS case, what lessons we can learn in terms of the corporate governance
of banks?
 In your position as analyst, come up with sensible governance policy recommendations
to prevent future bank scandals from happening.