As I See It: Terry Murden
Alison Rose has not exactly covered herself in glory in the early months of her tenure at the helm of Royal Bank of Scotland.
A further downsizing of the investment bank is already being questioned as it may leave the bank exposed to rivals able to offer a more rounded service. Worse still, the decision to change the parent group name does not bode well for the trust she wants to build with customers, particularly those in Scotland.
Ms Rose, whose first results this week were accompanied by a 6.8% fall in the shares, said in a speech afterwards that she wants to “create longer-term, deeper relationships with our customers”.
This can only happen if the bank is honest with them. In statements issued on Friday, and in a media briefing that morning, Ms Rose and her chairman Howard Davies insisted the change of group name resulted from a need to re-align the bank with the bulk of its customers who bank with NatWest, a brand it has owned for 20 years.
The media, politicians – and customers – were not fooled by this mealy-mouthed explanation. Everyone knows the directors have spent years wringing their hands over the tainted Royal Bank of Scotland brand. It had already been shortened to RBS Group. Two years ago, Sir Howard admitted that the current name was weighing on attempts to revive its fortunes and may have to be ditched.
So why was he and his CEO so reluctant to ‘fess up on Friday and admit that a brand damaged beyond redemption was the real reason for the change?
Ms Rose now launches her term as the bank’s first female CEO on the wrong foot. Instead of taking customers with her at the start of what she proclaimed was a “new era”, she’s managed to add to their distrust in the banks.
The brand will survive in Scotland – on accounts and branches (those that are left) – but dropping RBS as the parent group name is a blow to Scottish pride. Somewhat absurdly Edinburgh will be the headquarters of the NatWest Group in a country where it has barely any NatWest customers.
This will add further fuel to suspicions that the head office will gravitate fully to London. After all, the CEO has a contract that, unlike that of her predecessor, states that she will be based in London rather than Edinburgh.
The name change is already having a negative affect on the bank. Social media was flooded on Friday with customers suggesting that they would close their accounts. Paul Monaghan, a former SNP MP, called it a “very poor decision that will cost the Royal Bank of Scotland thousands of customers and many jobs across Scotland.”
Ms Rose is a 25-year veteran of RBS and has therefore worked through good times and the bad. During her early years she would have seen RBS acquire the battered NatWest brand that was thought beyond recovery. The fact that it is now superseding the parent shows how brands can be revived. Ditching RBS therefore looks like a premature and potentially ill-judged decision.
At the end of the day, RBS remains 62% owned by the state, with little prospect of that changing any time soon. Whatever the board does to change its identity, the taxpayers’ grip on the share register will be a reminder of the sins of the past.