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RBS and the Winners Curse

Geoff Riley

7th December 2008

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A seasonal hat tip to one of my students George Kirkpatrick for this excellent example of the winners curse! (I am assuming it is authentic!)

1 year ago Royal Bank of Scotland (RBS) within a consortium paid $100bn for ABN Amro (80% cash).

For this amount, RBS could today buy:

Citibank $22.5bn, Morgan Stanley $10.5bn, Goldman Sachs $21.0bn, Merrill Lynch $12.3bn, Deutsche Bank $13.0bn and Barclays $12.7bn,

and still have $8bn in change.

Well done RBS…

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Geoff Riley

Geoff Riley FRSA has been teaching Economics for nearly forty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD and Revision conferences in the UK and overseas.

@tutor2uGeoff

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