RBS needs to sort itself out – for the sake of taxpayers
Massive losses and unethical behaviour from the taxpayer-backed bank. What is going on at RBS?
Is there no end to the mess that is Royal Bank of Scotland? Once again the company has posted gigantic losses – this time of £1.5billion – and that’s just for the first six months of 2012. It’s almost double the loss of £794 million it made in the same period last year.
Revenues are down 8% and another 5,700 people lost their jobs at the bank during the first half. If that wasn’t bad enough, RBS has been forced to set aside £125 million to cover compensation payments for the recent IT glitches which left RBS, NatWest and Ulster Bank customers unable to get hold of their own money for two long weeks in June.
Oh, and did I mention the small matter of £135 million set aside to pay for yet more mis-sold payment protection insurance (PPI) claims, bringing the total PPI bill to £1.3billion, or the £50 million of compensation to small business owners mis-sold specialist insurance, known as interest rate swaps?
Much of the money RBS is losing is the result of unethical behaviour as well as simple ineptitude.
On top of this seemingly endless list of losses and cockups, the bank’s chief executive Stephen Hester admits that RBS could well face a hefty fine for its alleged part in the Libor (bank inter-lending) manipulation scandal and that staff members suspected of involvement have been dismissed. When will these embarrassments end?
With any other company we might just mutter “tut-tut” and forget about it, but in this case we can’t. Unfortunately, RBS is owned by the likes of you and me. Bailed out by the taxpayer at great expense in 2008, we now own 82% of the company.
And what may have looked like a reasonable long-term bet to Gordon Brown’s government has been a lousy investment. Three years into a five year turnaround programme and it’s hard to see light at the end of the tunnel.
The shares have collapsed since 2008 and, far from things looking up, Hester says we are in for a “grim period” for the banking industry. Great. I don’t know about you, but as a long-suffering taxpayer and shareholder, I’m not impressed.
Perhaps the most shameful aspect of this whole fiasco is that much of the money RBS is losing is the result of unethical behaviour as well as simple ineptitude.
It’s high time that RBS – and arguably the banking industry as a whole – pulled its finger out and made some radical changes.
Yet the industry, which apparently continues to reward failure with excessive executive salaries (although at least Hester turned his bonus down this year) just doesn’t seem to learn. What’s more, customer satisfaction is at an all-time low.
A poll of almost 4,000 MSN Money users shows that, out of the telecoms, banking, energy, water and insurance industries, the banking sector is ranked as providing the worst customer service by some margin, with twice as many votes as the energy sector. That takes some doing.
This simply isn’t good enough. The UK taxpayer has suffered enough. It’s high time that RBS – and arguably the banking industry as a whole – pulled its finger out and made some radical changes.
- Piper Terrett is a freelance financial journalist and author based in Hertfordshire specialising in saving money, greener living and investing
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