RBS ditches toxic name after nearly 300 years
Bank to be called Natwest from today
ROYAL Bank of Scotland will drop its 293-year- old name today in what chief executive Alison Rose called a ‘symbolic moment’.
The bank will take on the moniker of its more popular brand Natwest as it attempts to draw a line under the rocky period following its 2008 taxpayer bailout.
But the lender’s efforts to put its chequered past behind it are already approaching hurdles, amid warnings that the taxpayer is facing even heavier losses from its bailout than expected.
The Office for Budget Responsibility (OBR) predicted last week that the drawn- out sale of the Government’s stake in RBS could be pushed back by at least another five years, due to the coronavirus pandemic.
Market turbulence caused by the virus means the Treasury will not be able to re-start privatising RBS this year as planned, the OBR thinks. And the taxpayer, which was already facing a £32bn loss on the bank’s £45.5bn rescue during the financial crisis, will suffer even more due to the delays.
Along with setbacks to the sales of other smaller remnants of bust banks, the OBR predicts the postponement to RBS’s re-privatisation will add £11.4bn to the national debt over the next five years.
The OBR’s warning comes as RBS ditches the name it has held since 1727, in a bid to improve its reputation which was sullied in the aftermath of the 2008 financial crisis.
It is the latest step in a shake-up spearheaded by chief executive Rose, who took over last year.
She said: ‘This is a historic day for our bank as we intend to change our name to Natwest Group plc. Although there will be no changes to our customer brands, it’s a symbolic moment for our colleagues and stakeholders. The bank has changed fundamentally over the last decade and now is the right time to align our group name with the brand under which the majority of our business is delivered.’
Business was booming for RBS in the years leading up to 2008. Under the leadership of Fred ‘The Shred’ Goodwin – who earned his nickname for his ruthless costcutting – the bank went on an ill-advised acquisition spree.
After buying Churchill insurance, a string of US firms, and a minority stake in Bank of China, RBS’s buying binge culminated in the takeover of ABN Amro in 2007.
This proved to be the final straw for the rapidly expanded lender, which by then was heavily exposed to the US sub-prime mortgage crisis.
Just months later, its then- chairman Sir Tom McKillop called Alistair Darling, chancellor at the time, to tell him the bank would run out of money that afternoon.
A huge £45.5bn bailout followed, and even after selling down two chunks of shares in 2015 and 2018 – accepting a loss of more than £3bn – the taxpayer still owns 62pc of RBS.
Its reputation took a further battering after the City regulator found that RBS’s toxic Global Restructuring Group had brutally misthe treated thousands of small businesses. Rose is now attempting to give the bank a friendlier face, promising a renewed focus on small business customers and slimming down its investment bank. And today RBS will announce the appointment of economist Lord Stern as an independent adviser on the effects of climate change. Even so, in its ‘ central’ or mostlikely scenario, the OBR thinks the Government will have to wait for another two years before it can begin selling its shares in bank again. And in its worstcase scenario, this could extend beyond five years. When the Treasury does get round to selling its remaining stake in RBS, it will be at a heavy loss. Even since March, when the OBR put out its Spring report predicting that the taxpayer would suffer a £32bn loss from the RBS bailout, shares have tumbled by almost 50pc.
The bank’s stock is now trading at just under 122p, down from 502p at the time of the bailout.
Yesterday they were up 1.6pc, or 1.9p, to 121.35p.
Lord Mann, former chairman of Parliament’s treasury committee, said: ‘This overlapping from one crisis, banking, into another, the current one, is very unhealthy for the economy.
‘We are taking quite a gamble on RBS maintaining its value – a beady eye must be kept on their top bankers.’