Donald Muir's appointment to the club's board as a non-executive director at the behest of HBOS, now owned by Lloyds Banking Group, nine days ago appears to have been the point when control of Rangers' affairs was removed from the club's hands. Muir is a specialist in assisting ailing companies and officially joined the Rangers board to help them in their "strategic business interests".
Both chairman Alastair Johnston and chief executive Martin Bain had previously denied the banks were closing in since owner David Murray stepped down as chairman on 26 August, but Smith spoke freely last night of the new reality he described as "obvious to everyone".
It comes at the end of a week in which Murray's company, Murray International Holdings, announced it would be delaying publishing of its accounts for six months. This has been interpreted by some in the business community as a step taken to prevent scrutiny of just how incapable it is of propping up Rangers with the club's debts rising above the 30 million mark. And it comes at the end of a week in which Rangers suffered their most humiliating defeat in 53 years competing in Europe with their 4-1 thumping by Romanians Unirea Urziceni in the Champions League
"As far as I am aware that is the situation," said Smith when asked about reports the bank was in control of the club at his post-match conference following his side's 1-1 draw with Hibernian. "David Murray stepped down and they've placed a representative of the bank on the board.
"It is obviously not a good situation. It is not a situation anybody wants the club to be in. It's been up for sale for a while. It's not the bank's fault. If the bank had to take over in the circumstances they have, they are not going to invest in a football club. I think Rangers have been fairly honest about their situation. The players at the club have been on sale since January. We haven't bought a player for... in this transfer window, that will be 18 months. I'm very surprised anyone can't work out the situation. These circumstances have been here for quite a while now. And, despite some headlines, I've never complained about it and I'm not complaining about it now. I'm just saying it is a fact, and a fact of life that a lot of companies throughout the world are having a struggle at the present minute. When David Murray stepped away from the club I felt that was a bad thing for Rangers in the sense that he's tried as hard as he could over 20 years to invest in the club. Now we don't have that situation. So the quicker that gets cleared up, the better it will be."
It is Murray who is responsible for running up liabilities he patently now cannot meet – a fact some have blamed on the economic downturn. Yet there were plenty of alarm bells when he allowed Smith to become the country's biggest spending manager on his return in 2007, before reacting to the 2008 Champions League qualifying exit by sanctioning an 8m spend on players that produced a 3m "hole" in the club's budget that effectively led to the entire squad being put up for sale only six months later.
The club has, in effect, been for sale for four years but despite a number of reports of potential buyers, none has been found. Yesterday there were suggestions that board member Dave King, who invested 25m in the club in 2000, and another unnamed group were considering lodging an offer within the week but these were dismissed by sources at the club. Smith said he was unaware of any possible sale. "I'm not involved in that aspect, you'd need to ask others if there was anything like that," he said.
The implications for Smith's bid to retain the title will only emerge over time, but the fact the bankers have decided to exert control can only increase the likelihood there will be a demand for Rangers to cash in on Madjid Bougherra, their most valuable playing asset, in January. Already, with injuries to the Algerian and to Pedro Mendes, Kevin Thomson and Lee McCulloch, who came off yesterday, Rangers are running low on senior players. Smith conceded this was a process that was likely to accelerate and could only be offset by promoting from within. "It is maybe not the proper time to be blooding these boys (such as Andrew Little and Danny Wilson] but I don't think we are going to have much option shortly," said Smith.
Rangers' financial meltdown must also place question marks against Smith's own future. His present contract expires in only eight weeks, as does that of assistant Ally McCoist and first-team coach Kenny McDowall. As yet the three have not been offered extensions. However, it is believed that if a new buyer was found that wanted to retain his services he would be keen on staying.
Failure to see eye-to-eye with new regime has Smith talking himself towards exit door
LONG-suffering Rangers fans are seeing their beloved club up for sale and seemingly rudderless, with Sir David Murray gone from the scene and a chairman who resides in the USA. Now they may be about to lose their talismanic manager.
Walter Smith may even be gone in the next week or two, after his comments last night which confirmed that he has no money to spend and no control over the purse strings at Ibrox. Instead, the bankers have taken over.
In the world of football finance, banks do not expose themselves to customer dissatisfaction by placing directors on a board – new director Donald Muir has no formal links to Lloyds Banking Group, for instance. They do not need to do that. Lloyds – a group which has no great track record in football sponsorship – simply dictates how Rangers spend the bank's money.
Or in this case, not spend it. And it is Lloyds' money that Rangers spend. When it took over the crippled HBOS, it inherited Rangers' debts, probably north of 30 million, and any potential buyer will be saddled with that debt right away.
With the benefit of hindsight, everyone who thought the Murray era would end sweetly and that there would be a swift transfer to a rich new owner was looking at the situation through rose-tinted glasses.
When a businessman as powerful as Murray moves out of any company, the reverberations are long and loud and highly transformational. Lots of players have gone as a side-effect of Murray's withdrawal. Now it may be Smith's turn.
There is more than one coat on a shoogly nail at Ibrox. Persistent rumours have surrounded chief executive Martin Bain, with Gordon McKie, chief executive of the Scottish Rugby Union, touted as a possible replacement should Bain, too, decide that the end of the Murray era is time to pursue new opportunities.
But Smith's departure would be colossal for the club. Alex McLeish admitted he left Ibrox in 2006 because Sir David Murray would not fund new signings.
So could Smith do a McLeish?
The trouble for Smith is that he eats, breathes and sleeps Rangers. Cut him and he would bleed royal blue. But how long can he go on in the humiliating position for a Rangers manager of not being able to decide who he can buy and sell? How long will a proud man take being told what to do by a bank manager?
Smith may even now be planning his exit strategy – a term financiers understand – and indeed, it may even be under way. Or else why speak out as he did last night?
The fans, who are always kept in the dark, may like to ask other questions. Exactly who is in the frame to buy Rangers? If there are no buyers, what happens next? What support will Lloyds continue to give? Will there be money to buy the new players the club desperately needs?
It should make for an interesting AGM, and this time no one can call for Murray to go, because he already has.