Ross McEwan, the chief executive of RBS, was quick to declare that his bank had reached a ‘milestone moment’ when it agreed on reparations of $4.9 billion (£3.6 billion) in the US to atone for its role in the financial crisis.
It’s a funny old world when a multi-billion pound payment for misconduct sends your share price up, but let’s be charitable – it’s a significant step on the slow journey to becoming a normal bank again, albeit a full ten years after the meltdown.
Hold the champagne, though: so long as the appalling behaviour of its Global Restructuring Group towards small and medium-sized firms remains unresolved, then RBS cannot claim to have cleaned its slate.
The wretched entrepreneurs who fell into the hands of the GRG division expected it to help them through a period of trouble, but instead were exploited, bullied, asset-stripped and abused.
It’s a funny old world when a multi-billion pound payment for misconduct sends your share price up, but it’s a significant step on the journey to becoming a normal bank again
About 6,000 firms were under the control of the GRG between 2008 and 2013, and of those about a quarter are putting in a complaint – an unacceptably high rate for any organisation. Others no doubt have suffered in silence.
RBS is going through these and reckons it will have dealt with most of them by the late autumn. A process for those in deadlock, overseen by retired judge Sir William Blackburne, is in place. This won’t do the trick. The conflict between firms and lenders has turned so toxic it is hard to see how it will be put right.
The banks behaved abysmally. RBS and Lloyds – as we set out on these pages again this week – were the worst offenders. The complainants are not always entirely blameless and, in a minority of cases, are bogus bandwagon-jumpers. Others have become obsessive conspiracy theorists.
The anti-RBS campaign is also infested with chancers seeking to enrich themselves via the victims, some of whom are desperate enough to listen to anyone who claims they can help. The antics of these unscrupulous individuals and their deluded supporters threaten to taint an important cause.
The sheer volume of complaints shows just how deep the problems go.
Regardless of the rights and wrongs of particular cases, the scandal at RBS and at Lloyds goes to the heart of what a bank is for. It is not to rack up huge profits and bonuses for the executives, but to channel money to individuals to improve their prosperity, and to entrepreneurs to build businesses. This is a key part of our system that continues to misfire.
The banks behaved abysmally. RBS and Lloyds – as we set out on these pages again this week – were the worst offenders
Ross McEwan, who came in several years after Fred Goodwin, is sometimes unfairly vilified for problems he inherited, rather than created.
He has tamed Fred’s risky, sprawling global empire and slimmed it down into a smaller, safer and more manageable bank. Now he has drawn a line under the crisis-era mess across the Atlantic, following an earlier milestone in February as RBS reported its first annual profit for ten years.
He is expected to start paying a dividend again in the second half of this year and the Government is likely to start selling down its 71 per cent stake before next April when the new tax year starts.
Credit where it’s due for all that. But let’s not forget that, as taxpayers, we are nowhere near getting our money back, or that the behaviour of RBS and Lloyds created a lost generation of entrepreneurs.
To avoid this ever happening again, we need proper supervision of lending to firms, which is at present largely unregulated. There should also be an Ombudsman and a tribunal for redress, a clampdown on unfair contract terms and regulation of action groups to keep out the shysters.
The banks could redeem themselves by playing a productive role in local economies, by backing growth firms, including spin-outs from universities and high tech start-ups. Yet they are rushing to close branches and to airbrush out past sins. Will they ever learn?
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