The Conforming Board: Royal Bank of Scotland

Gerry Brown () and Randall S. Peterson ()
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Randall S. Peterson: London Business School

Chapter 10 in Disaster in the Boardroom, 2022, pp 145-157 from Springer

Abstract: Abstract The demise of the Royal Bank of Scotland (RBS) is an example of groupthink that saw several board dysfunctions coming together as a result of the drive for consensus in the boardroom, such as lack of independence, amplification of culture and missing key voices. Groupthink involves a shared Illusion of unanimity where silence is taken as agreement and an element of self-censorship where every board member avoids rocking the boat. All of this was evident at RBS and resulted in a lack of rigorous challenge, scrutiny and questioning, especially by the independent directors. The result was a charismatic CEO was given free rein to wield his considerable power, culminating in the acquisition of ABN AMRO. The board seems to have had a lack of prudent and effective risk management, resulting in insufficient due diligence in acquiring a complex business.

Keywords: Royal Bank of Scotland; ABN AMRO; Groupthink; RBS; Ineffective governance (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-91658-9_10

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DOI: 10.1007/978-3-030-91658-9_10

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