Too bad I never got fired . . . SIR GEORGE MATHEWSON The man least likely to be given his P45, tells Ian McConnell a spot of gardening leave would, however, not have gone amiss

The main attraction for Mathewson in getting fired, he declares at a dinner held last week ahead of his retirement, would have been a period of gardening leave.

And, eventually, we come to perhaps the most surprising revelation from the man with the tough-guy reputation - whose unwillingness to suffer fools has not made him the most popular man among the City pack.

He is interested in trees. "I have some 18 acres in Perthshire, " declares Mathewson. "I have some interesting trees there."

However, as if to ensure his formidable reputation is not destroyed by a couple of sentences, he adds quickly: "I am not someone who is running about peering at flowers or anything. I am more interested in trees really."

Any preferences on the arboreal front? At this question, he attempts to move back off personal issues by stating in a seeming mixture of exasperation and amusement: "I don't have a favourite tree."

Mathewson is in very good form indeed as he takes his leave as chairman of Royal Bank.

Asked how he is as he walks over for pre-dinner drinks, he replies: "I stop working next week. How are you?"

Then, reflecting on a colossal career which has made a huge difference to the Scottish economy, Mathewson quips: "My biggest disappointment is I have never been fired. I have never had any gardening leave."

There was little chance of that happening at Royal Bank. He became chief executive in 1992, having joined as director of strategic planning and development in 1987, after taking career advice from Sir Ian MacGregor, his late friend and former British Coal and British Steel boss.

In 1992, Royal Bank made profits of GBP32m. Last year, it made GBP8.25bn.

Harking back to the failed hostile bid by HSBC for Royal in 1981, which came after the Scottish bank proposed an agreed deal with Standard Chartered, Mathewson says: "The knock-out bid (from HSBC) is less than the profit we make in one month."

The deal was blocked ultimately by a trade department which at that time included Norman Tebbit.

As chief executive, Mathewson instigated a huge restructuring involving thousands of job losses, under which only 30-per cent of the senior executive team survived. He took what at the time were revolutionary steps, such as removing lending decisions from branch managers and centralising them, and restructured the retail banking operation with the famous Project Columbus.

Mathewson says he decided to resign from the SDA in 1987 without knowing what he would do next.

A year earlier, he had been offered a "highly remunerative" berth in the City but turned it down. Having decided to leave the SDA, desiring a move to the private sector because he "wanted to do better financially", he "got a lot of job offers".

"The one that most intrigued me at that time was running the New Zealand power authority. My children were all in favour of this. One of them was a serious rugby player and thought he could only benefit. He was 12 at the time."

Explaining how he came to roll up at Royal, Mathewson says: "I had made friends at the time with Ian MacGregor, who was a man of immense capabilities . . .

"I had to make up my mind about the New Zealand (job). I was almost on the bloody boat. Ian said, 'I think the Royal Bank would be good and it is historically important for Scotland'.

"I said, 'Okay, I will do the Royal Bank'. I was lucky. I think, due to (then Royal director) Robin Duthie's influence as much as anything, I got this main board position as head of strategy."

He adds: "I saw RBS as being important for Scotland - a historic institution which I thought I could make a difference to. It was only when I got there I realised how big a difference I was going to have to make."

After the restructuring, Royal Bank thrived.

In his early days at Royal Bank, Mathewson was a big supporter of the famously well-paid Peter Wood, the man who created Direct Line and revolutionised the general insurance industry.

The retiring Royal Bank chairman says of Direct Line: "In the first place, I had nothing to do with it. It happened before I joined the bank. I had a lot to do with it thereafter. Direct Line took six or seven years to get into profit. Within the bank, there was a lot of misunderstanding of the numbers. I was a strong advocate of Direct Line . . . and made sure we didn't sell it . . .

"At that time, there were a lot of people who didn't understand the strengths. Peter had a very hard time."

However, Mathewson makes it clear his backing of Wood was based entirely on money.

Asked why he was a fan of Direct Line, Mathewson replies: "Because I could do the net present value of their profit flows. As simple as that."

Of his relationship with Wood, Mathewson says: "In the main, we worked together pretty well." Then, with his customary sting in the tail, he adds: "There was always a bit of trouble negotiating his salary."

Mathewson is magnanimous when asked about Wood's suggestion a few years ago, at the time he was launching esure for rival HBOS, that Royal Bank should erect a statue of him outside its then headquarters building in St Andrew Square in Edinburgh because of his contribution.

"The value of his business was very important to us at one time, " says Mathewson. "It is still important to us now."

Another man who was crucial was Iain Robertson, who had succeeded Mathewson as chief executive of the SDA. Robertson was headhunted by Mathewson to Royal Bank of Scotland in 1992, after a stint at a County NatWest operation which was at the time reeling from allegations of fraud surrounding its handling of a rights issue for Blue Arrow in 1987.

Robertson, who took over the 1988 Glasgow Garden Festival project when Mathewson left the SDA, oversaw phenomenal growth in the Scottish bank's corporate banking business before stepping down last year. Mathewson pays tribute to Robertson's abilities several times during the dinner.

Citing the "Direct Line phenomenon", Royal's Tesco Personal Finance joint venture, US subsidiary Citizens and a crossshareholding arrangement with Spanish bank Santander, brokered personally by Mathewson, Royal's retiring chairman says: "All of these things contributed to us, for several years, being the fastestgrowing bank in Britain from a situation where we were frankly in the crap.

"We got to this point where we were making a billion pounds (in annual profits). We were the first Scottish company to ever make a billion pounds. It was at that point the NatWest opportunity came along."

Royal acquired NatWest for GBP21bn in early 2000, after a lengthy bid battle with arch-rival Bank of Scotland, which subsequently merged in 2001 with Halifax to form HBOS. Royal targeted NatWest after it became clear the City would not countenance a move on Barclays, which had gone through some executive turmoil.

By the time Royal Bank acquired National Westminster in early 2000, Robertson had built the Scottish institution's corporate business massively from the fledgling operation it was when he joined.

Mathewson declares: "I don't want to go into the NatWest thing. Another time, another place. A few good stories which will remain untold for a few years yet."

However, he cannot resist entirely.

Asked if these stories are about how Royal took NatWest from Bank of Scotland, he replies: "Or how they gave it to us."

And he just has to have one more pop at the scaled-down "bank in a box idea", for the likes of workplaces, proposed by Bank of Scotland during the bid, which came at a time when industry commentators were erroneously calling time on bricks-and-mortar branches with the rise of the internet.

Bank of Scotland envisaged an opportunity to reap gains from NatWest's property portfolio through this concept.

"How hairy was that, when you think about it in retrospect, " says Mathewson of the box idea. "People want to see their bank on the high street. Until there is a total absence of complaints about queues, we need branches."

There was talk at the time about how Royal employed game theory in its attempt to outf lank Bank of Scotland, which moved first on NatWest in September 1999.

Did Bank of Scotland take Royal by surprise with its initial move?

"No. No, no, " says Mathewson. "It is generally known it was discussed with us (by Bank of Scotland). Didn't take me by surprise one bit but annoying that it happened one weekend I was in Boston at the Ryder Cup. Might have been a bit surprised that it was that weekend but it didn't take me by surprise at all."

And this brings Mathewson to the subject of Sir Fred Goodwin, chief executive of Royal Bank of Scotland. There have been various tales alleging differences between them but the pair have always been at pains to emphasise the respect they have for each other and how they see eye to eye.

Mathewson is fulsome in his praise of Goodwin, former chief executive of Glasgow-based Clydesdale Bank.

"I also had the best guy there was, probably in the world, to run the integration, " says Mathewson. "That was Fred Goodwin, who I had recruited two years before with not a headhunter in sight. The rest is kind of history."

Mathewson, not the biggest fan of corporate governance codes, declares: "It is probably not politically correct to say I was looking for a successor."

However, he adds that, when a board decides to look for a successor, "somebody has to take the lead".

"I took the lead in looking for a successor to myself, " declares Mathewson, who later highlights his personal involvement in seeking out new Royal chairman Sir Tom McKillop, the Ayrshire-born former chief executive of pharmaceuticals giant AstraZeneca.

On the chief executive search, Mathewson says: "We had consultants involved and it wasn't very successful. I thought, 'I have been going to Scottish banking meetings and there is this young guy called Fred Goodwin there. He seems to have something different about him'. At that stage, I was looking for a finance director to become chief executive.

"I talked to Fred at a party. I said, 'Would you be interested?' He said, 'I might well be interested', but he said, 'I have made a commitment to go to Australia for six months with (Clydesdale parent) National Australia Group'. I am certain Fred would have become chief executive of National Australia Group.

"I was a bit under pressure to get on with this. I said, 'On you go. If you don't like it, phone me when you get back'. He didn't like it, or, his family didn't think it was right for him and his family at that point in time, is a better way of putting it. He phoned me and the rest of it is history.

"I think he didn't like to bring up his children away from all the family (infrastructure) and all the aunties and uncles."

Unable to resist another wisecrack, Dunfermline-born Mathewson adds: "He comes from Paisley. How could you ever give up Paisley?"

Mathewson believes the structure Goodwin has created means it is much more likely that his eventual successor as chief executive will come from within Royal rather than outside.

On whether the City has maybe not given Royal enough credit for its achievements, Mathewson quips: "I would have to say I agree with that, unless I am some sort of masochist."

Mathewson is clearly rattled by the lack of recognition of what Royal has built in Citizens, in a US market which has proved a graveyard in the past for much bigger corporate animals than the Scottish bank was when it entered in 1988.

He says: "Everyone says, 'When are you going to fall on your face in America?'We have been there for 17 years. We have an American business, run by Americans. We could float it tomorrow. Why would it fall on its face?"

Mathewson, who is married to Lady Sheila and has two sons Magnus and Torquil, says of his retirement plans: "I have got one or two things I will be doing. In general, apart from maybe one thing, I will do most things in private markets rather than the public markets. I have no desire to play a big public role or anything."

And what does he think will happen to the world's eighthlargest bank, which he has played a key role in creating, after he goes.

He does not see a takeover bid for Royal in the foreseeable future, in spite of all the rumours of a move by the likes of US giant Citigroup. "I don't think we are susceptible to being bid for - obviously not on any hostile basis."

He also points out such a deal could hardly be argued on efficiency, given the Scottish bank's low cost-to-income ratio.

He adds: "When you look at the future, are we looking at a global bank that covers the world? There is no such thing. Citigroup doesn't cover the world. It doesn't cover all of America, for a start."