Royal Bank Of Scotland (RBS) chairman Sir Howard Davies has revealed the bank is considering changing its name because of the ‘very serious’ reputational damage it has suffered since the financial crash of 2008.
A decade on from the day the bank asked Chancellor Alistair Darling for a cash injection to save it from collapse, Sir Howard said the damage to the bank from its bailout and subsequent troubles had persuaded the bank to put the name ‘under review’.
He said that the bank, known simply as The Royal north of the border, had now fixed its historical problems and was ‘shifting focus’ to invest in the group’s other brands – Natwest, Coutts and Ulster Bank.
“The brand damage to the core brands of Natwest, Coutts and Ulster has not been that bad at all, even though the parent has found it difficult to invest in them.
“They have been remarkably robust and we are now able to devote more investment and management attention to them,” he said.
Biggest bank in the world
Briefly, just before the 2008 financial crisis exploded, RBS was the biggest bank in the world, has embarked on an ambitious programme of acquisitions which would eventually lead to its downfall.
Outside the UK it owned Citizens Financial Group – the 13th largest bank in America – and was the second largest shareholder in the Bank Of China. But it was the disastrous takeover of Dutch bank ABN AMRO which triggered the bank’s virtual collapse.
Combined with other losses on the year, the takeover sent RBS £28 billion into the red – the largest ever annual loss in UK corporate history – and the bank’ share price fell 66% in one day.
The Labour government stepped in with an injection of £45.5 billion of taxpayers’ money and despite several attempts at selling back shares the bank is still 62% publicly owned.
RBS went on to make £63 billion in further losses in the next decade. It was caught up in the LIBOR rate-rigging scandal and earlier this year reached a $4.9 billion settlement with the US Department of Justice for its part in the sale of toxic mortgage bonds which were seen as a major contributory factor to the financial crash in America.
Additionally, there have been thousands of job losses and hundreds of branch closures throughout the country.
Sir Howard said customers had been left unhappy with the need to focus on near constant fire-fighting.
The attitude was reflected in a recent survey which showed RBS joint bottom of a league table for personal and business banking with less than half its customers prepared to recommend its services to others.
Turning the corner
The bank showed it was turning the corner when it declared its first profit in a decade in February of this year and in August declared its first dividend since the financial crisis.
Chief executive Ross McEwan commented: “The road to recovery has been long, but over the past decade we have achieved one of the biggest corporate turnarounds in history.
“Rebuilding our reputation will take longer. With our main legacy issues behind us, we are now fully focused on building a much better bank for our customers.”
Financial experts believe the government may be about to make its biggest move yet to re-privatise the bank by offering £3 billion worth of shares.
Two previous smaller sales have both lost money, based on the share price paid by Labour at bail-out, but Chancellor Philip Hammond has since admitted it is unlikely the taxpayer will ever recover the full cost of the rescue deal and shares will have to be sold at a loss.
“He said: “We have to live in the real world and make decisions on the future of our holding in RBS in the best interests of taxpayers.”