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After years of problems, can McEwan lead RBS out of its war bunker?

As RBS stages its annual meeting at Gogarburn today, it will hope not to be hearing again from shareholders such as Nigel Henderson and Neil Mitchell.

Mr Henderson, who owned hotels at Portree and Montrose, and Mr Mitchell, who headed software group Torex Retail, have used past meetings to air their grievances, as shareholders do. But their complaints were that the bank plotted their financial destruction, anticipating the Tomlinson report which last year concluded, on evidence from over 200 businesses, that RBS's Global Restructuring Group (GRG) habitually engineered financial distress in its SME borrowers in order to profit.

RBS refuted the report, as it has dismissed those complaints, and as it has pursued borrowers Derek Carlyle, David Booth, Ian McDonald and Len Wilcox, whose separate Court of Session actions alleging mistreatment by GRG have been reported by The Herald in the past year. Mr Carlyle's case is now headed for the Supreme Court.

Author Ian Fraser says that since July 2012 he has been contacted by "owners and managers of hundreds of businesses" who believe they have been appallingly treated by RBS and are still suffering.

The bank, however, told him: "The vast majority of businesses that have gone through GRG have had a positive outcome."

RBS has now promised to close down GRG and to be more transparent in its fees and charges to distressed firms. But the sales-driven culture inside RBS under Fred Goodwin which did so much to destroy the bank lives on, according to a trade union, and its fall-out continues to damage the UK economy, admits the bank's former chairman.

Those views, cited in Mr Fraser's book 'Shredded — Inside RBS' , run contrary to the picture painted by Mr Goodwin's successor, Stephen Hester, of a reformed, customer-focused bank serving the economy.

Sir George Mathewson, the bank's former chairman who recruited Mr Goodwin, is said to think that neither Mr Hester nor his successor Ross McEwan "really know what is going on" inside the business, but that "the bank's relationships with small corporates at the front end are now disastrous". He says 'them and us' banking has dealt "a huge economic blow to the UK".

But the culture was seeded in the Mathewson era more than a decade ago by the bank's Performance Evaluation Framework (PEF) and its Leadership Excellence Profile (LEP), which "turned bankers into double-glazing salesmen", a former senior manager in corporate lending is quoted as saying. "We were increasingly run by number-crunchers and we were encouraged to hit our customers with every additional charge we thought we could get away with — that included making loans conditional on interest rate swaps, even though we didn't really understand those products."

By 2002 the mis-selling of PPI was "endemic across the group", insiders told Mr Fraser, with Glasgow-based leasing arm Lombard creaming off £40m a year in commissions hidden from unsuspecting borrowers. In a sales spree of interest rate swaps (derivatives linked to loans) between 2005 and 2008, ex-insiders suggest the bank "used a set methodology to cajole selected commercial customers into buying the swaps which, in 90 per cent of cases, they neither requested nor desired".

Fred Goodwin himself boasted to analysts in August 2008 that the bank's sales of interest rate swaps had soared by 59 per cent over the previous year, the book reveals.

The regulator says 92 per cent of swap loans in its review were mis-sold, RBS was the biggest seller, and the legal bill for banks' mis-sales outside the review could run into billions.

That was the era of skewed performance incentives, we are told. But fast forward five years, with 41,000 bank staff axed during Mr Hester's reign, and Unite is still bitterly opposed to what it calls "an iniquitous and unfair performance management system" which it believes has been only "marginally tweaked", Mr Fraser records.

Loyal shareholders, many still licking the wounds of their own disastrous losses, will be hoping that McEwan is the man to lead RBS out of its war bunker.

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