Royal Bank of Scotland — House of Commons, 2015-11-05
Topic: Domestic Commerce
George Kerevan (Scottish National Party, Centre-left): My hon. Friend, and old friend, makes a very good point. There is not a wall between the customer and the rank and file staff of RBS; they too are customers and shareholders, and they too suffered That brings me to where we go next. I do not think that Members of this House would stand in the way of returning RBS to private ownership. When the Minister replies, she must not define our difference of opinion as being that the Government support a return to private ownership while the rest of us are demanding that RBS stay in the public sector. That is not the issue. The issue is the emphasis placed by the Treasury and the various Treasury agents in their approach to the various generations of management in RBS. In public ownership, the key goal given to RBS management was to pay down the level of debt—to reduce the balance sheet. During that period, RBS reduced its balance sheet by some £1.3 trillion. To put that in numbers that people can understand, it is equivalent to the entire balance sheet of Lloyds plus the entire balance sheet of Standard Chartered Achieving that has required the management of RBS to focus only on internal issues. Of all the weaknesses that have been identified by Members—I agree with all of them—the central weakness is that the management has concentrated on RBS’s problems and not on the customer. I will explain how I would crystallise this debate for the Minister. In choosing when and how to send RBS back to private ownership, the test must not be, "Did we get all our money back? Is the Treasury satisfied? Has the balance sheet been paid down to a certain amount?"; it must be the impact on the customer and whether RBS has returned to a customer-led focus. I think that the current chief executive, Ross McEwan, and his staff are struggling to do that. Since the senior management was changed two years ago, there has been some refocusing. I remind the Minister that the proximate reason for the change in chief executive was that the then chief executive had disagreed with the pressure that he was being put under to get the bank ready for full privatisation when he was saying, "No, we need to restructure in favour of getting the bank ready to meet the needs of the customer." The test is not about ideological machismo—are we in favour of private ownership or public ownership?—but the fact that the bank can be privatised and move forward only when it is capable of winning back its customers and its customers’ confidence The fundamental break with RBS’s customers has been the loss of faith of its small business customers. That has not changed; we have heard a number of examples today. Whether or not RBS was ultimately culpable, through the global restructuring group, in driving viable businesses to the wall, that is what RBS’s customers feel happened. Until that is resolved, the bank will never become the bank that we all want that can drive the economy forward The Government have to be very careful about how they approach privatisation in case they further break the confidence of small businesses. In August, when there was the first wave of privatisation in which the Government started to sell off their shares, that produced bad headlines yet again. I personally think there was evidence of short selling. The Treasury certainly lost more money than it needed to in trying to sell off 5% of shares. That brought further bad headlines, which cannot be allowed to happen again At this stage in the game, after seven to eight years of constant restructuring at RBS, it will not be easy to start again and ask RBS management and staff to have a whole new business model. We might come to that point, but I give a word of caution. If we look at the long and sorry history of the attempt to hive off Williams & Glyn, which is a disaster still waiting to happen, we will see that it is not possible simply to wave a magic wand and break up RBS into a dozen or so regional banks. I believe we need to create regional and stakeholder banks, but breaking up RBS may be more difficult than some Members imagine Williams & Glyn was not a standalone bank—it was a brand that was totally integrated into RBS. Hiving it off again has taken so long that the original investor, Santander, walked away. The RBS management has been forced to enter into a bizarre arrangement with Corsair Capital, which is an interesting name for the partner RBS has joined in order to bring in capital to Williams & Glyn and then float it off. I do not think that RBS will make any money when it is floated off, so the taxpayer and the Treasury will not get any more money back. Corsair Capital is an American group with a long history of consolidation in the banking world, so I do not think it will be very long before Williams & Glyn is bought by somebody else, precisely so that the Corsair group makes a return on its money and effort. In the end, therefore, we will be no further forward when it comes to small businesses I am being chided by you, Madam Deputy Speaker, so I will be brief in offering some practical suggestions.