RECENT history has not been kind to Royal Bank of Scotland.

With assets of over $3.7 trillion (£2.9tn) – more than the UK’s entire gross domestic product – it was on top of the world in 2007.

Yet the following year, the bank found itself on the brink of collapse, forced to seek a Government bail-out worth tens of billions of pounds as the global economic crisis raged.

Last week, in a re-brand aimed at moving on from this troubled period, the institution, which was founded in 1727, formally dropped “Scotland” from its name and is now known as Natwest Group.

The change does not affect branches. Chief executive Alison Rose described the development as “historic”.

However, one of Scotland’s leading economists has warned it is not only sad but also symptomatic of a far more serious underlying trend.

Tony Mackay, a professor of economics and adviser to the World Bank, said: “For a long time, RBS was one of the biggest banks... in the world. And we also had Clydesdale Bank and Bank of Scotland. And what has happened is those banks have shrunk and been taken over.

“I just think that, 10 or 15 years ago, the three banks... had an excellent reputation internationally but they’ve all gone steadily downhill. RBS changing its name to Natwest is a symbol of that decline.”

Mr Mackay suggested the issue was sector-wide. “I’ve spent much of the last 20 or 30 years working overseas and if I told people I came from Scotland, they’d say, ah – that’s where you have all those banks and financial services,” he added.

“Now the banks and financial services in Scotland do not have a strong international reputation. And I think the loss of the Scottish name from RBS is a significant sign of that loss of reputation.”

Mr Mackay said a major part of the problem had been worsening standards of service. “RBS is, admittedly, probably a bit different from the others,” he said. “The UK Government is still the largest shareholder in RBS. But I think that, along with the other two, consolidation and amalgamation have meant that lots of the best people have left, or moved to London. And I would say the standard of service offered by RBS, Clydesdale and Bank of Scotland has declined.

“My experience in dealing with them now is that you cannot speak to a bank manager, you’re put through to a computer and it says no… The standard of service has declined significantly, I would say.

“I think RBS, Clydesdale and Bank Scotland have become much less willing to provide loans to business in Scotland. I just don’t see them as active as they were in supporting local industry. They have become more risk-averse.”

Mr Mackay’s criticisms have been strongly rejected by senior figures at industry body Scottish Financial Enterprise. Graeme Jones, the organisation’s chief executive, said the sector was “highly regarded within the UK and internationally”.

He added: “For the seventh consecutive year, our credentials as a global leader in financial services were further reinforced by securing the most foreign direct investment in the UK after London. We know talented people with sought-after skills is a key factor in firms expanding or relocating their business here, which is vital for economic growth and providing more opportunities for people who live, study and work here.”

Mr Jones also highlighted Scotland’s strength in developing the technology and software that underpins today’s financial services industry.

“Our thriving fintech cluster is one of the strongest in Europe, with the number of fintech SMEs increasing by more than 98 per cent from 72 in 2019 to 143 this year,” he said.

“As an industry, we employ more than 160,000 people across banking, life and pensions, asset management, and professional services all of whom are working extremely hard to ensure millions of personal and business customers continue to have access to financial services in its many forms during this difficult time, with frontline colleagues, such as those working in branches and contact centres, going above and beyond to support vulnerable people, families and businesses.”

Natwest Group and Lloyds Banking Group, which is the parent company of Bank of Scotland, declined to comment. Clydesdale Bank was asked for comment.