OPINION: Fortis tries to pull wool over eyes

First it was the Royal Bank of Scotland and now it is Fortis of Belgium. When RBS announced that it was to raise £12bn of new capital from shareholders to pay for the costs arising from its decision to acquire Dutch bank ABN Amro last summer, it sought to plant the thought in the media that the deal had been done before the credit crunch.

Anthony Hilton
Anthony Hilton

When Fortis last week similarly announced it had to find an additional £4bn to stabilise its capital base, the blame was again put squarely on the fact that it had participated in the ABN Amro acquisition just before the credit crunch.

In both cases the public are invited to believe that the acquiring banks were innocent victims. They had a good idea that went wrong through no fault of their own. RBS bought the Dutch bank and then suddenly the world was hit by a financial earthquake.

But this is the most shameful kind of PR - if you repeat a lie often enough, people will come to believe it. The first approach to ABN Amro was indeed made before the markets began to break in June of last year, but there was ample evidence that financial conditions were changing dramatically.

Indeed, in the late summer when the banks sought shareholder approvals to proceed, there were warnings in the City and the press that the eventual loser, Barclays, would come out of the deal better off.

The truth is that management ego and ambition blinded the acquirers to the obvious risks of the deal and the fact that the price they had committed to no longer made financial sense. They had ample time to withdraw but they consciously chose not to do so.

It is a PR strategy that could and should backfire. One would think much better of the management, and be convinced that the banks were in safe hands for the future, if the management showed any sign of contrition and took responsibility for their mistakes.

But by playing fast and loose with the facts and deliberately trying to downplay their responsibility for the disaster they create the opposite impression. It is a very odd way to go about restoring trust.

Anthony Hilton is City commentator on London's Evening Standard

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