The future for RBS

Taxpayers duly took ownership of the Royal Bank of Scotland yesterday, or at least 57.9% of it. Once the share price fell below the offer price, there was no incentive for shareholders to buy them, leaving the Treasury to mop up a majority stake in one of the world's largest banks. And though they are not on anyone's Christmas list, taxpayers are also buying £5bn of the bank's preference shares. The challenge now is to balance the interests of taxpayers with those of customers, shareholders and staff. This means the RBS of the future must differ markedly from the one we know. In recent years, under the energetic leadership of Sir Fred Goodwin, the bank embarked on rapid expansion. Simultaneously, along with other banks, it became dangerously exposed to debt-based US sub-prime property loans. The complex financial technology of structured investment technology and credit default swaps enabled it to grow faster than the underlying economy and lend freely at competitive rates of interest.