The Courier & Advertiser (Fife Edition)
Shareholders to grill RBS over branch closures
REPORT: Committee urges bank to halt plans to axe 52 branches in Scotland
Royal Bank of Scotland executives are expected to face a barrage of questions from shareholders over dividends, branch closures and re-privatisation at the lender’s annual meeting this week.
The bank, 72% owned by the taxpayer, is likely to be quizzed over plans to kickstart dividend payments after agreeing a $4.9 billion settlement with US regulators.
The deal, which related to claims RBS mis-sold toxic mortgage bonds in the run-up to the financial crisis, paves the way for the resumption of payouts, ending a barren decade for investors.
Chief executive Ross McEwan said the bank would have conversations with the regulator “in the next month or so” over relaunching shareholder payouts.
Equity analysts at Jefferies expect they could start at 6p per share. However that figure could grow to 16p by 2020, the broker predicts.
RBS has failed to fully appreciate the “damage” that will be caused by its decision to close dozens of its branches, a report from MPs has found.
The Scottish Affairs Committee urged the bank, which is majority-owned by the taxpayer, to halt plans to axe 52 branches across Scotland, describing the move as a “devastating blow” to those communities affected.
The RBS branches due to close are in Aberfeldy, Pitlochry, Perth South Street, Kinross, Dundee Stobswell, Dunblane, Montrose and Comrie, although the latter has been given a reprieve.
RBS said the closures were a response to the increasing numbers of customers using mobile and online banking.
However, the plans have attracted fierce criticism from local communities, business groups and politicians. The Courier’s Save Our Banks campaign is also demanding plans are shelved.
The committee report said closures would remove “vital services relied upon by businesses and disproportionately affecting vulnerable customers”. It states: “We are not convinced that RBS fully appreciate the damage these closures will do to the communities and businesses that rely on these branches.”
The committee also called into question the assumptions made by the bank that led to the decision.
Impact assessments carried out by the bank do not provide sufficient information on the situation in relation to individual branches, it found.
“For example, whether customers have access to a suitably reliable broadband connection to allow them to use online banking, the practicality of travelling to the next nearest branch or the effective availability of alternative services such as mobile branches,” the report states. “Without this information we do not see how these documents can be said to have properly assessed the impact of closures on customers, businesses and communities.”
The committee questioned how the 10 branches given a six-month reprieve would be evaluated and on what basis decisions on their futures would be taken. Committee chairman Pete Wishart said: “The loss of a permanent bank, and the services it provides, cannot be replicated by the occasional visit of a mobile bank or community banker.
“RBS did not consult adequately and even at this last stage should reverse their decision to close these branches.”
Ochil and South Perthshire MP Luke Graham endorsed the report. “The mitigations proposed by RBS are utterly pathetic and entirely inadequate,” he said.
An RBS spokesman said: “We have listened to customers, colleagues, communities and elected representatives, and welcome the committee’s recognition that we have engaged and responded.” He added: “Across Scotland, usage of our branches is down 44% since 2011; only 1% of our customers in Scotland visit their branch weekly.
“We recognise that every customer will have different banking needs and we are committed to ensuring all our customers receive the best possible service.”
Condemnation of the Royal Bank of Scotland’s proposal to axe more than 50 branches across the country has been vocal and wide-ranging. Local people have voiced their dismay in petitions and public protests.
Small business owners have raised grave concerns about the effect on their livelihoods and on the high streets they serve.
Politicians from all parties have criticised the move, by a bank which is still majority-owned by the taxpayer.
And this paper has campaigned for a reprieve for the branches across Tayside on the target list.
Now we can add the Scottish affairs committee to the expanding list of critics.
MPs have concluded that RBS has failed to grasp the devastating effect its closure programme would have on communities and called on bosses to reverse the decision.
Committee members raised concerns about the bank’s impact assessments; its consideration of issues such as rural broadband speeds or the distances between branches; and the inadequacy of its consultation.
RBS issued a carefully worded statement in response, insisting it had listened to customers, colleagues, communities and elected representatives.
If that is really the case, it will act on the growing chorus of concerns and prove it really is committed to its customers. Until then, the fight goes on.