“A milestone moment.” That was how RBS CEO Ross McEwan described a provisional agreement to pay £3.6bn to settle a US investigation into the bank’s activities in its sub prime mortgage market in the run up to the 2008 financial crisis.
Only the boss of a bank that’s had as many problems as RBS could have said something like that about such a huge penalty.
Most of the institutions that have faced similar such fines have had the good grace to blush a bit.
Yes the fact that the issue has been more or less dealt with is a welcome development for the bank, given the pall it has cast over the business. But it is still a tone deaf response to pouring such a huge amount of cash down a black hole.
The actual amount might be a bit less than some people had feared, but it’s still a kick in the teeth, all the more so given that most the the money is taxpayers’s money. The state still owns 71 per cent of this bank, which spent billions of pounds on bailing it out
Mr McEwan went on to talk about “the price we have to pay for the global ambitions pursued by this bank before the crisis” which would have been fine if combined with a form of words translatable as “never again”. But that’s not quite what he said.
The milestone bit was probably included as a lead in to him talking “investment case” for the bank now being “much clearer”.
I suppose it is, and RBS boss are almost as keen as Chancellor Philip Hammond to get itself off the state’s books.
They'll be cheering loudly from the sidelines as the latter reheats the stalled privatisation process, crystallising a huge loss in the process. More than £25bn at current prices.
The shares would have to reach 502p for the taxpayer to break even, and trading at a bit below 290p they’re not even close.
Meanwhile the bank still has the lingering issue of its treatment of distressed small business customers in the background, has annoyed those that remain with it by getting rid of their relationship managers, leaving them at the mercy of calls centres, and created howls of outrage with its branch closure programme. Critics fear it will hit those in rural areas in the country that bears its name particularly hard.
Forget the investment case for a moment, and the Chancellor really ought to.
RBS still has a lot of work to do before it can be seen as the “good safe bank” that people can be “proud of” that Mr McEwan has talked about in the past. A lot of work.
As I’ve written before, I’m not sure its bosses actually see that. The unfortunate talk of “milestones” in the wake of a £3.6bn fine emphasises the point.
