FOR a very brief period in the middle of last week, the Royal Bank of Scotland (RBS) was no longer Scotland’s biggest company. As its share price fell, the value of the banking giant dropped to just below the market capitalisation of Scottish and Southern Energy (SSE).

Even though RBS shares hit a new low of 71.7p on Friday, by then SSE, (£9.2 billion) had been dragged down with the rest of the market so RBS (£11.8 billion) stayed in top spot. It’s not much to cheer about, though.

When you add up the market capitalisation of the the top 13 plcs in Scotland, it comes to just under £51 billion and that includes RBS, which was worth £51 billion on its own this time last year.

Perhaps that says more about the weakness of Scotland’s plc base than it does about RBS. Anyway the bank had bigger worries than being No 1, although it emphatically denies having a funding problem in the short or medium term.

Even though shares hit that new trough on Friday, it was not as bad as the collapse earlier in the week. RBS must be hoping that the fall on Friday, which affected many parts of the market and not just banks, is because all the bad news is being flushed out of the system in an effort to finally find the floor.

Who can tell? As one banker told me last week, events which in themselves could be described as a crisis occurred on 21 of the last 22 days.

RBS will be first in line for the biggest tranche of the government cash and must have it sorted very soon. Lloyds and HBOS may take longer as they decide whether to work together or separately, but that injection will change RBS forever, giving the government control over as much as 50% of the institution.

While claims of the demise of Sir Fred Goodwin, the chief executive, and Sir Tom McKillop, the chairman, were exaggerated such a move would surely signal the end for at least one of them.

Although Goodwin has indicated he will go if investors want him to, he should stay until the ABN Amro integration is complete and then leave. McKillop may have to depart sooner to satisfy the political masters’ desire for a scalp.

Politics is coming further into play. The government has to be seen to act and, unlike the Scottish government’s intervention in the HBOS takeover, there is little influence Alex Salmond can have.

Laying the blame for RBS’s woes solely at Goodwin’s door, as many have done, is simplistic. The timing of the ABN Amro deal was not great but will produce tangible long-term benefits. If anything, maybe Goodwin was too focused on the US a few years ago when getting into Asia in a bigger way would have been a smarter move.

Goodwin knows the buck stops with him but let’s not carp about the huge rewards he earned while the going was good. RBS did very well for a long time and a lot of people, and this country, benefited as a result.

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