A Litte Bit Pregnant
I watched the excellent BBC programme last night - on the rise and fall of the Royal Bank of Scotland (RBS).
The action focused on the bank's former chief executive - Sir Fred Goodwin - who was nominated for his knighthood by none other than Gordon Brown MP - the former Chancellor and Labour Prime Minister.
And Sir Fred didn't disappoint - in fact I learned something new, an exciting new term - which Sir Fred 'decribed as 'due diligence light' or DDL for short.
Now as I understand what Sir Fred was saying 'due diligence light' is the banking equivalent - of being a little bit pregnant.
In other words - it's a concept that exists only in the mind of the befuddled, deluded or couldn't care less.
Because DDL is what Sir Fred and RBS applied as their 'stress test' - in shelling out 27 billion Euros to take over part of rival Dutch based bank - ABN AMRO.
Now I took this as shorthand for Sir Fred and his RBS colleagues saying - 'we can't be bothered our arse to check what we are buying with all this shareholders money'.
So we'll just 'hope for the best' and pretend that banks can be - a little bit pregnant.
Result - complete disaster.
Because as it turned out Sir Fred and the board of RBS which backed the deal unanimously - bought themselves a pig in a poke.
ABN AMRO wasn't worth a row of beans - never mind 27 billion Euros - and most of its 'assets' was worthelss sub prime mortgage stock in the USA.
Yet while the UK banking sector almost collapsed - and RBS shareholders lost all their money - Sir Fred turned up smelling of roses - and left the company with a pension worth £690,000 a year.
Which Sir Fred magnanimously agreed to reduce to only £340,000 a year - in the wake of a huge public outcry.
So if anyone tries to persuade you about the merits of due diligence light - tell them to stick it where the sun don't shine.
Because it simply doesn't exist.
The action focused on the bank's former chief executive - Sir Fred Goodwin - who was nominated for his knighthood by none other than Gordon Brown MP - the former Chancellor and Labour Prime Minister.
And Sir Fred didn't disappoint - in fact I learned something new, an exciting new term - which Sir Fred 'decribed as 'due diligence light' or DDL for short.
Now as I understand what Sir Fred was saying 'due diligence light' is the banking equivalent - of being a little bit pregnant.
In other words - it's a concept that exists only in the mind of the befuddled, deluded or couldn't care less.
Because DDL is what Sir Fred and RBS applied as their 'stress test' - in shelling out 27 billion Euros to take over part of rival Dutch based bank - ABN AMRO.
Now I took this as shorthand for Sir Fred and his RBS colleagues saying - 'we can't be bothered our arse to check what we are buying with all this shareholders money'.
So we'll just 'hope for the best' and pretend that banks can be - a little bit pregnant.
Result - complete disaster.
Because as it turned out Sir Fred and the board of RBS which backed the deal unanimously - bought themselves a pig in a poke.
ABN AMRO wasn't worth a row of beans - never mind 27 billion Euros - and most of its 'assets' was worthelss sub prime mortgage stock in the USA.
Yet while the UK banking sector almost collapsed - and RBS shareholders lost all their money - Sir Fred turned up smelling of roses - and left the company with a pension worth £690,000 a year.
Which Sir Fred magnanimously agreed to reduce to only £340,000 a year - in the wake of a huge public outcry.
So if anyone tries to persuade you about the merits of due diligence light - tell them to stick it where the sun don't shine.
Because it simply doesn't exist.
