Give RBS its freedom back
WITH the taxpayer stake in Lloyds Banking Group down to 2.95pc following the latest 1pc placing in the market, the long nightmare for all the other shareholders will soon be over.
Most investors will never forgive the illfated takeover of HBOS in 2008. The pain caused in the shape of lost dividends, diluted capital and more than 50,000 lost jobs has been horrendous but at least the Treasury can claim the job is done.
If only the same could be said for the Royal Bank of Scotland. Iceland’s isolation from international finance is over, the Irish banking system all but back on its feet, BNP Paribas (where some of the first fissures in sub-prime mortgage securities were seen) is confident enough to buy highend estate agency Strutt and Parker and profits are rolling in at the US banks.
But RBS remains 71.3pc in Government hands, has nine years of unbroken losses and pulled back from divestment of Williams & Glyn branches due to IT issues.
When post-crisis banking reforms were being put in place, a core idea was that failing banks could be put into receivership over a weekend and back trading on Monday morning. At RBS it has been a case of the Government seizing control nine years ago and not letting go.
So what should happen? New Zealander Ross McEwan should be allowed to ringfence all of the bad stuff (including the US mortgage security liabilities).
The retail bank representing 57pc of group profits should be separated along with commercial banking, the enterprise renamed NatWest, the hQ moved from Edinburgh to the City and the reshaped bank sold.
Outside the purview of the Government RBS has a chance of prospering. Just how poor Whitehall decision-making can be is evident from Chancellor Philip hammond’s rapid reversal on National Insurance contributions for the self-employed.
The RBS bad bank should be put into run-off. Invariably it means creditors eventually see much of their money back – witness Equitable Life. But it can take years. Courting reform ONE concerning aspect of the Charlotte hogg episode was the assertion by the chairman of the Bank Of England’s governing Court, Anthony habgood, that the conduct of the short-lived deputy governor ‘exceeded the standard that would be expected in the private sector’.
Maybe, but it demonstrated how out of touch the Bank is with initiatives bravely led by Colette Bowe and Alison Cottrell at the Banking Standards Board (BSB) to clean up UK banking.
Egregious examples of breaches of codes of conduct still exist. Most notably, the chief executive of Lloyds, Antonio horta-Osorio, escaped almost unscarred when he abused his position by turning a trip to a banking conference in Singapore into a tryst.
Cottrell is aiming to get agreement among senior bankers and staff on certain core values including ‘honesty, reliability, competence, responsiveness, respect and openness’. All of these should be on the agenda of the Bank of England, too, and written into its code of conduct.
One cannot help but think that all the time that the Court is part of the Bank’s internal apparatus and retains a certain mystique about what it does, it is never going to escape groupthink and the dominance of the governor and his cohorts.
That is why it is about time the Court dropped its legacy name, became a nonexecutive advisory board and included Cottrell or someone else from the BSB. Fake news DONALD Trump has tweets and Mike Ashley the Regulatory News Service (RNS). Each time the Sports Direct owner is aggrieved he vents his spleen via RNS. In the honourable Trump tradition Ashley accuses critics of the pay ratio between bosses at Sports Direct of ‘fake news’.
Far easier to besmirch the messenger and misuse RNS than to put perceived injustices inside his enterprise right. Hipster hub GAMING technology pioneer Teddy Sagi of Playtech is retreating from the firm he founded by reducing his stake by 4.1pc to 17.8pc, collecting £113m along the way.
Sagi has moved into property and, through AIM-quoted Market Tech, is bringing back the infrastructure in London’s Camden Market, seeking to add a tech hub to hipster retail and entertainment functions.
Cool.