GLOBAL FINANCIAL CRISIS, PART 3: David Torrance looks back at the last time a Scottish bank fought off predators

All political lives, unless they are cut off in midstream at a happy juncture, end in failure," observed Enoch Powell, "because that is the nature of politics and of human affairs." Happily for the late George Younger, who left politics at a happy juncture to become chairman of the Royal Bank of Scotland (RBS) in 1991, having been a board member since 1989, he proved a rare exception to Powell's oft-quoted maxim.

Although a brewer and politician by trade rather than a number-cruncher, the famously charming Younger cared deeply about Scottish banking and would have been dismayed at the recent turn of events. Not for George a world of "spivs and speculators", rather a seemingly lost era of gentleman bankers and responsible investors.

Not only was banking in Younger's blood (his great-grandfather, the 1st Viscount Younger of Leckie, had been a director of the National Bank of Scotland and Lloyds), but by the time he became chairman George had already helped prevent RBS falling into foreign hands. His banking credentials, therefore, were sound.

When two separate bids emerged from the Hongkong and Shanghai Banking Corporation (HSBC) and Standard Chartered to take over RBS in 1980, Younger, then Margaret Thatcher's Scottish Secretary, and the so-called "Scottish lobby" went to work. Although the Scottish Office believed the HSBC proposal (it had offered to make Edinburgh its European HQ) to be preferable, the rather ineffectual RBS chairman, Sir Michael Herries, favoured the Standard Chartered offer.

Younger, however, recognised the danger of both bids, and together with George Mathewson, then chief executive of the old Scottish Development Agency, furiously lobbied to retain RBS as an Edinburgh-based financial institution. When industry secretary John Biffen referred the bids to the Monopolies and Mergers Commission, he made it clear that the importance of Edinburgh as a financial centre and a strong Scottish banking system had been taken into account.

It seems likely that a young RBS economist by the name of Alex Salmond was watching all this with interest, for nearly two decades on the first minister has been employing similar tactics in his largely symbolic battle to retain HBOS jobs and infrastructure in Edinburgh. Younger would certainly have supported Salmond in this, while sensibly cautioning against quixotic attempts to restore the Bank of Scotland (BoS) as an independent bank.

The high point of Younger's stewardship of RBS came in 2000, when BoS was beaten in a titanic battle to take over NatWest. Its chairman, Sir David Rowland, dismissed BoS as a "toytown treasury" business, and through smart tactics, superior number-crunching and Younger's genuine yet calculated charm, RBS emerged victorious in the largest hostile takeover battle in UK history.

"Put it like this," Sir George Mathewson said of Younger's contribution to the battle for NatWest, "it may be hard to say exactly why he was important, but he was important, and the Bank of Scotland suffered through not having someone with his breadth of experience." That breadth of experience, however, would have told him where to draw the line. When Sir Fred Goodwin began to pursue ABN Amro, Younger would certainly have cautioned against.

Yet during his decade-long chairmanship, Younger was no stranger to tough decisions. His appointment coincided with reorganisation and cost-cutting, and during the most recent recession provisions for bad debt slashed RBS profits. He also, in 1993, presided over job cuts totalling 3500.

"Gentleman George", however, carried it off with aplomb and sensitivity, undoubtedly aided by a hard-earned reputation for playing a straight bat. To him, banking was as much about trust and responsible financial management as healthy balance sheets and executive bonuses.

For all their formidable talents, the partnership of Sir Tom McKillop and Sir Fred Goodwin lacks the instincts of the Younger/Mathewson dynamic. While Mathewson was perceived in the City as tough and aggressive, Younger was a perfect foil, viewed as urbane and softly-spoken. But that would not have prevented Younger pinning some of the blame for recent events on the current prime minister. While it was certainly the government of which George was a member that started the banking party, arguably it was Brown and co who let it get out of control.

"In central banking as in diplomacy," remarked JK Galbraith, "style, conservative tailoring and an easy association with the affluent count greatly and results far much less." Not a bad epitaph for George Younger, although arguably the results were more than a match for his style.

David Torrance's authorised biography of George Younger, A Life Well Lived, is published this week by Birlinn