BFBL 604: Corporate Governance and Regulation
Individual Coursework Assignment
This assignment is worth 30% of the module mark.
The aim of this coursework is to test your understanding of the application of corporate governance issues and application to business situation and your ability to select relevant information and present arguments in clear and logical manner. It also aims to test your ability to relate a case scenario to appropriate regulatory requirements and make an initial evaluation and provide recommendations.
Read the provided case study below CAREFULLY. Then consider the questions provided at the end of the article when writing a business report. In the report you are required to discuss the main reasons behind the failures of RBS and to explain to what extent the corporate governance practices were responsible for these failures. Finally, you need to explain how this failure could be avoided. In writing this report you can use any sort of information and references (preferably academic ones with implications for corporate governance) that are relevant to the case study (RBS). Submission will be made online through the blackboard. The submitted coursework will be checked for plagiarism using the Turnitin software. The assessment of the coursework will depend on to what extent you’ll manage to integrate the corporate governance principles and practices that we cover in this module into your analysis for the case study (RBS).
Length of Report: 3000 Words Max.
Date issued: teaching week 4: 08.02.2013
Submission deadline: Thursday, 04.04.2013 at 12 p.m. (noon) Submission form: Online
Type of Coursework: Individual
Qualifying mark: 35%
Royal Bank of Scotland (RBS)
(Source: Tricker, 2012)
The Royal Bank of Scotland was an ancient institution with roots in the 18th century. Under the recent leadership of Chief Executive Sir Fred Goodwin, the company pursued a growth and acquisition strategy. The board, chaired by Sir Tom McKillop, accepted their Chief Executive's growth strategy, which included the acquisition of National Westminster Bank in 2000, when Sir Fred axed some 18,000 jobs, earning himself the in-house title of 'Fred the Shred'. But subsequent investments in American sub-prime loans and the acquisition of Dutch Bank ABN Amro for £10 billion in 2007, proved disastrous. Although, it should be said that the acquisition of ABN Amro had a bright side: the group included Hoare Govett: one of the City of London's most successful brokers
In 2007, the market valued the bank at some £75 billion (£6.02 a share). But by early 2009, the value had fallen to less than £5 billion (10p a share), even though it had received at least £37 billion from the British government in October 2008. Subsequently, the government provided more funds to keep the bank afloat, taking its equity stake to 58%. The government also agreed to guarantee some £325 billion of RBS's toxic loans in a government-backed insurance scheme. In February 2009, RBS reported a loss of £24 billion - a record for the UK.
Sir Fred Goodwin, 50, was described by friends as modest man, without airs and graces, and a strong sense of responsibility. He was a close ally of British Prime Minister Gordon Brown. But another perspective suggested extravagance, mentioning the Falcon 900 executive jet, with a car park space close by to save him walking far, and office wallpaper at £1000 a roll. Matthew Oakeshott, a member of the UK Treasury Select Committee, which grilled Sir Fred, said that the profligacy reminded him of Enron and that the waste and greed "would shame a medieval monarch". "The auditors and non-executive directors," he added, "were well-fed lapdogs round the throne". Sir Fred resigned in November 2008, and was replaced by Stephen Hester.
But anger at Sir Fred's retirement package, which included a pension equivalent to £703,000 a year for life, raised huge public ire with...
Please join StudyMode to read the full document