The chief executive of Royal Bank of Scotland, Ross McEwan, recently said in a media interview that he thought it would take 5 or maybe 10 years to rebuild trust in the bank to where the bank would like it to be.
I’m afraid I think that’s optimistic for two reasons.
First, the breach of trust was so egregious. I don’t mean the unwise lending that got the bank into financial difficulty - that was foolishness rather than something darker. The real problem was that there was a change in the culture of the bank, from an organisation you could genuinely trust to treat you as a long-term customer and seek to serve your best interests, to one which wanted to sell you new “products” including utterly inappropriate ones such as interest rate protection (“protection” here as in racket rather than safety).
RBS was not alone in doing this - but where it was in a class of its own was how it treated business customers who got into difficulty. The RBS recovery division, latterly known as Global Restructuring Group and formerly Specialised Lending Services (always be suspicious of organisations which change their name - think Sellafield or the EU), was a rogue organisation embedded within the bank, intensely disliked by the many decent people in RBS’s mainstream operations, which bullied and gouged customers in distress. Don’t take my word for it - read the excellent reports by Lawrence Tomlinson and Promontory Consulting on GRG which lay bare how bad it was.
A Skilled Persons Report on the bank's treatment of small and medium-sized enterprises referred to its GRG, carried out by Promontory and commissioned by the Financial Conduct Authority (FCA), was published in February.
The first problem is in the past but the other issue is not. The still current issue is that the senior management at RBS, and it seems their supervisors at the FCA, still don’t really get how appalling the bank’s conduct was. Ross McEwan said in the same media interview that “we were not there supporting customers in the way we should have been”. The Promontory Report was never going to see the light of day if RBS and the FCA had anything to do with it. It took the Treasury Select Committee - the only organisation which comes out of this episode with real credit - to get the Report into the public domain. Recently, when the same Committee asked Mr McEwan some questions they found him evasive and unconvincing.
There will very probably be in-house lawyers whispering in Mr McEwan’s ear that he must not admit liability and must only answer questions in the narrowest way possible. I know that these people may genuinely think they are doing the right thing - protecting the bank - but they are not. If RBS really wants to rebuild trust and recover the goodwill it had for generations, it has to take some risks and it may have to invest some money.
To rebuild trust we need to hear from Mr McEwan, not the carefully crafted words of a politician or lawyer but the voice of the down to earth New Zealander I think he actually is. He needs to tell us that the behaviour of GRG was disgusting, a betrayal of all that a decent bank should stand for. He needs to convince us he understands the bank has ruined lives. He needs to tell us not just that GRG has been disbanded but that those who were in that division have gone from the bank. He needs to show that there are independent oversight structures in place to prevent it happening again.
And the name? As a proud Scot I hate to say it but “RBS” should be consigned to the bin of history and a new brand take its place.
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