As I See It
Key questions for RBS still unanswered
With good reason there are many who say that running the Royal Bank of Scotland is something of a poisoned chalice. Billed as the bank that almost broke Britain, RBS came to stand for all that was wrong with the industry: greed, corporate bullying, over-expansion.
Ross McEwan has required the combined skills of a diplomat and a street fighter to prove to the market and a hugely sceptical public that reviving the bank’s balance sheet and reputation was worth taking on and – more to the point – achievable.
With the European Commission last week agreeing to the bank’s “alternative remedies” for repaying its state aid obligations, McEwan now sees light at the end of a very long tunnel.
Cleaning up the legacy issues has been a massive task and a distraction to the day job of focusing on customer service and returning the bank to profitability. He claims it will be “back making money” again next year, although the underlying operations have been in reasonable shape for some time.
In an interview published this weekend he admits the bank is “getting better but we still have a long way to go”, a convenient way of passing over the “jam tomorrow” question. He’s been promising better times ahead since he took the job in 2013 and he knows it’s taking longer than he expected.
He repeats his threat to move the bank’s registered office to England in the event of Scottish independence and defends his views on the need for credit card prudence. He reaffirms earlier comments that he is a people rather than a numbers man, who failed his accountancy exams while studying for his business studies degree. He laughs it off, though in truth it’s not really a laughing matter.
I wanted some insight into the board’s realisation that it would not be able to float or find a buyer for the assets we had expected to be rebranded as Williams & Glyn. McEwan reassured me ahead of the 2016 AGM at Gogarburn that, despite headlines to the contrary, everything was on track.
He has regularly told us what a profligate bunch the old board led by Fred Goodwin proved to be and how he and his new team are putting things right. So I’d like to know how he and this new board justify spending £1.5 billion supposedly preparing Williams & Glyn to start trading, only to add this sum to the pile of write-offs. Not a numbers man? Mmm…
And how does the aborted sale affect the bank’s growth plans? There was talk this time last year that it wanted to get back into acquisitions, with Ireland a prime target (so much for focusing on its core UK operations) wth Dublin-based Permanent TSB and KBC Ireland said to be in its sights. Can we really see RBS return to the acquisition trail any time soon?
Though billed as his thoughts on rebuilding the bank’s reputation he offers nothing on how the crisis has affected morale, or its ability to hire and retain good staff. He says little about the branch closures which some claim are less to do with customers switching to digital banking and more about cost cutting (just ask the counter staff).
I was looking for his thoughts on the Financial Conduct Authority’s decision this month not to publish the full report into the bank’s alleged treatment of small firms and whether this issue has really gone away.
In all probability, McEwan won’t be around to answer these questions. He is coy about his own future, particularly talk of him returning down under to run Commonwealth Bank of Australia. He was passed over for the top job once before and there is a view that if he gets the call he would jump at it. And pass the chalice to the next would-be saviour.