Sir George Mathewson has never made much secret of his desire for a significant deal to propel Royal Bank of Scotland (RBS) into the top tier of British banking.
At last, after years of disappointments and three months before he turns 60, he has got his wish with the takeover of National Westminster Bank, which also owns Ulster Bank. RBS has pledged to retain Ulster Bank. "George has been aching for this one for years," says one banker.
In the last round of British banking mergers, when Lloyds combined with TSB and Cheltenham & Gloucester, and Abbey National and Halifax both took over substantial building societies, RBS was left on the sidelines. Even smaller prey, in the shape of the Birmingham Midshires building society, was snatched from RBS's grasp when Halifax decided it could pay more.
Then, last year, Sir George spent weeks attempting to persuade Barclays, short of a chief executive at the time, and evidently adrift, of the merits of a merger. From Edinburgh's St Andrew Square, where RBS's headquarters sits in Georgian splendour, the case seemed obvious. But Sir Peter Middleton, who had taken the helm temporarily at Barclays, remained unconvinced, and soundings with large shareholders suggested the market would not welcome a hostile bid. The Barclays experience appears to have been telling. No one had ever accused Sir George, a blunt-spoken rugby enthusiast with strong and often derogatory views on most subjects, and no small opinion of his own abilities, of being shy about speaking his mind. But when the opportunity came up to pitch for NatWest, silence descended on RBS.
"It was a real role reversal," commented one investment banker, noting that the tempestuous Sir George negotiated patiently behind the scenes for an agreed deal that never came while Peter Burt, his calmer and more affable opposite number at rival Bank of Scotland, charged in aggressively with a hostile bid.
A venture capitalist with a doctorate in electrical engineering and an MBA from the US, Sir George came to RBS in 1987 after nine years at 3i, the venture capital organisation, and six years as head of the Scottish Development Agency. The SDA has also nurtured many of his closest henchmen, such as Iain Robertson, who runs RBS's US bank.
He took over as chief executive in 1992, an inauspicious moment for RBS which was haemorrhaging money. His reputation for ruthlessness derives mostly from the management clean-out at the time. It left a scar in Edinburgh, and established his name as an iconoclast who was willing to defy banking tradition.
"George is a real toughie," says the head of a Scots investment bank. "He has done well for the bank, but it's been with a lot of noise and Sturm und Drang. Peter Burt, by contrast, has also done a good job, but without shouting about it."
Yet RBS's management styles may make the integration process with NatWest easier to handle. Most of BoS's top managers have served half a lifetime with the same company, while RBS has brought in people more readily from outside organisations. "We have a mix at the top of the bank, with a huge amount from outside, not lifers," says Mr Robertson.
That should make it easier for NatWest managers to be given considerable autonomy, as RBS plans to devolve power to regional managers. One question worrying some NatWest bankers is whether Sir George can tolerate the English. The question might legitimately have occurred to anyone watching an England-Scotland rugby match within earshot of Sir George's seat at Murrayfield. But what can sometimes come across as anti-English sentiment is in fact more anti-establishment. He can be just as incendiary about the Edinburgh stuffed-shirts as he can be about the English.
If there is one species for which Sir George reserves his strongest contempt, it is institutional fund managers. He often confesses that he regards those who invest the money of Britain's largest pension funds as the only professionals who get paid for destroying value.
That has made the last few weeks particularly trying, as RBS has had to court fund managers high and low in search of every last NatWest vote. Advisers were worried that Sir George would lose patience in one of these interminable meetings, and launch into a tirade against the profession. To judge by the results, he succeeded in staying calm.
Within Edinburgh's close-knit financial community, where Sir George is perhaps admired rather than warmly embraced into the fold, observers say they will be intrigued to watch the NatWest takeover play out. "The reaction to George in London has been interesting," says one Edinburgh investment banker. "There's been a slight sense of `We hope he never gets his hands on an English bank.' Well, now he has."
