in Scotland. The RBS that has just fallen into the hands of the British state was essentially the creation of two men - its current chief executive Sir Fred Goodwin and its former chairman, Sir George Mathewson (pictured previous page). They transformed what was until a decade ago a small (but successful) Scots bank into the giant we see today. They did so principally through one transformative deal - the takeover of an ailing English bank, the National Westminster, in 2000.

Although this was supposed to be a friendly takeover, it was anything but. Goodwin and Mathewson were prickly and aggressive. They had contempt for the English bankers running NatWest. In their view, the English were lazy, second-rate and smug. After the deal went through, the English board running NatWest was swept away, its offices in the City sold off and the whole show moved to Edinburgh where it was placed under a predominantly Scottish board of directors.

Culture and national identity have their place in banking, just as everywhere else. But once the purchase of NatWest had

gone through, Scotland accounted for just a fragment of the group's revenues. Increasingly, the bank did business all round the world. Was there not a need for a broader range of views around the boardroom table?

There was, but Goodwin and Mathewson were in no mood to entertain the idea. The Scots directors knew their place and tended to be compliant. It is hard for an outsider to understand what superstars Goodwin and Mathewson became in Scotland after the NatWest takeover. This, after all, was a country in which takeovers generally led to power going south, not the other way round. So it was hardly surprising that their Scots colleagues were reluctant to question their judgment.

But it became ever clearer in the years after 2000 that Goodwin's judgment did need questioning. Drunk on the success of NatWest, where he pushed up profits sharply by cutting costs, Goodwin forgot that the success of the deal had been built on buying a valuable asset relatively cheaply.