“FRED the Shred” is back in town. Sir Fred Goodwin, chief executive of Royal Bank of Scotland, who made his reputation after buying National Westminster and then stripping out huge costs, now has the chance to prove he can do it again. This week, after the last votes dribble in, RBS and its two continental consortium members, Fortis and Santander, will take control of the Dutch bank ABN Amro after a bruising six-month campaign.

Like it did with NatWest, RBS has it all to prove. In his favour, the bits that RBS is taking amount to only 40% of the size of NatWest. Only this time, the deal is loaded with more complexity and regulatory tripwires. And that is before the Edinburgh-based bank disentangles ABN into three parts, leaving RBS with the skeleton. RBS keeps ABN’s wholesaling (making it the biggest player in Europe) and Asian operations. But it could take as long as three years to separate wholesale from its retail operations, which will be owned by Fortis.

Goodwin’s record speaks for itself and it would be foolhardy to bet against him, but the terms of the consortium takeover were struck in a market that bears little similarity to today’s. The valuation that was ascribed to ABN now looks very high and RBS must prove that despite this high entry price its investors will still benefit from the acquisition. That said, the deal is costing RBS €15 billion (£10 billion) and already €1.7 billion of cash cost savings have been identified in combining the two wholesale operations.

At the back end of this week Goodwin and other senior members of the consortium will go to Holland to meet their new “colleagues”. Fellow board member Johnny Cameron will fly to ABN operations in Hong Kong and Singapore.

It will be the first such meeting between them all, and will be a tense affair. Some 19,000 job cuts have already been worked out, but it will be at least 45 days before the consortium releases details where they will come from. Part of this process will involve the future of Hoare Govett, one of the oldest firms in City broking. It is possible that potential conflicts with RBS’s corporate-lending arm may see this operation divested, but no decision has yet been made.

This deal is all about execution, and if you believe Goodwin can achieve it, shares in RBS have at least a 20% upside from their current levels of 569p. The only nagging doubt is that when RBS lost out to Bank of America for ABN’s US operation, LaSalle, the bank had to find another reason to stay in. During the NatWest takeover, RBS shares were marked down and then outperformed. Can Goodwin repeat history? Is that what Bob Diamond, head of Barclays Capital, and Cameron were discussing when they met at a party held at the Serpentine Gallery last Sunday?

Air turbulence

RAFAEL DEL PINO, executive chairman of Ferrovial, will have been disappointed last week when he read the Competition Commission’s verdict on what prices BAA should charge over the next five years. BAA didn’t get as much as it wanted, which will have been of concern to Del Pino. Ferrovial led a group of investors that took BAA off the stock market last year.

But I hope, for the sake of his blood pressure, that Del Pino did not read as far as page 79 of the commission’s report. Under the heading “Issues arising from acquisition of BAA by Ferrovial”, the watchdog talks about what problems flow from the change of ownership, in particular those caused by the new company’s level of debt, and its plans to refinance that debt.

The commission points out that in the financial year before it was bought, BAA paid £270m in interest. Following the Ferrovial deal (and the loading onto the company of the loans used to buy it) it expects to pay £820m.

The commission says this could be a problem. “We are concerned about the ability of BAA to develop the infrastructure and facilities of Heathrow and Gatwick airports . . . given the competing funding obligations in ADI [the intermediate company between Ferrovial and BAA] and BAA,” the report said.

And there’s more. The commission said it wasn’t entirely happy about the “security” in the airports being passed to financial institutions. By “security” it means the airports themselves are being used as the collateral for the loans and, if Ferrovial has its way, as the underpinning for a huge bond issue next year. Should Ferrovial not meet its interest payments, the banks can grab Heathrow – and Gatwick, and the five other UK airports. The report said this raised concerns about a “loss of control”.

In the end the commission decided it wouldn’t do anything, because the current report was only meant to deal with prices over the next five years. But it said it would return to the question next year, when it publishes a much bigger study about airport ownership. It hinted that it might even recommend a change in the way airports are regulated, with the introduction of the more proscriptive style of oversight used in the water industry.

All this will be unsettling for Del Pino, but is not a disaster. If it all goes wrong, and there is tougher regulation and a demand for a break-up, Ferrovial will still come out of it smiling. A sale of BAA’s constituent parts should yield more than what he paid last year. Gatwick is the obvious choice for a sale – and if he could just convince the watchdogs that it could be taken out of the ambit of regulation, as Stansted has been, then he could get a price that would make all his recent BAA woes evaporate.

john.waples@sunday-times.co.uk

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive