Royal Bank insists it backs small firms
Lender says new Boost scheme shows it wants to help companies achieve potential
ROYAL Bank of Scotland has developed a new programme to help small firms in Scotland accelerate growth, which the embattled lender said showed it taking the initiative again to support a key sector.
The Boost scheme is intended to help firms make useful connections and to gain access to experts and information on subjects ranging from internet security to the potential impact of Brexit.
It sees Edinburgh-based Royal Bank positioning itself as a helpmate for businesses rather than simply a provider of financial products.
The taxpayer-owned giant has faced fierce criticism for the way its Global Restructuring Group treated some small businesses following the financial crisis.
In November the bank reserved £400 million to refund fees paid by customers of GRG from 2008 to 2013 and launched a complaints process headed by Sir William Blackburne, a retired High Court Judge.
But the head of business banking in Scotland for RBS, Susan Fouquier, said the Boost programme was the latest in a series of moves by the bank to make life easier for small firms.
Noting RBS is running a high profile advertising campaign in which it is billed as “Royal Bank For Scotland”, Ms Fouquier said: “These are not just words. We are proactively doing as much as we can.”
For example, she noted RBS last year decided to issue business customers with a Statement of Appetite showing how much it might be prepared to lend them, even for those who had not applied for credit.
“People have asked lots about ‘are banks open for lending, are they open for business’ and we absolutely are,” said Ms Fouquier.
She added the bank’s new lending for small businesses in Scotland was “stronger than ever” in the final quarter of last year.
There has been no sign of demand for credit falling in spite of reports that confidence levels have been falling amid the uncertain outlook for the economy.
Ms Fouquier also cited Royal Bank’s support for schemes such as the Entrepreneurial Spark start-up programme for early stage businesses.
However, the Boost initiative got a guarded welcome from the Federation of Small Businesses in Scotland.
Colin Borland, head of external affairs for the FSB in Scotland, noted research by the organisation indicated small firms found credit became harder to obtain in the final quarter of 2016. This pointed to a tightening in credit conditions following a period of easing.
He renewed the FSB’s criticism of branch closures by lenders such as Royal Bank. Last month RBS announced plans to close nine outlets in Edinburgh, half of the total.
The federation believes branch closures create difficulties for small firms especially in rural areas.
Mr Borland said small firms appreciate the face to face service offered by people with local expertise in branches and facilities such as cash handling.
Bank branches provide valuable jobs and draw people into the areas in which they are based.
“As welcome as all these initiatives are, they can’t forget their responsibility to the wider economy,” said Mr Borland
Noting increasing numbers of customers bank online, Ms Fouquier observed: “It’s not cost-effective for us to maintain branches where the footfall does not justify it.”
She said RBS employs people who have developed detailed knowledge of communities across Scotland.
The free Boost programme will be headed by 11 regional Business Growth Enablers who will offer a one to one mentoring service with the support of the bank’s relationship managers.
It was designed following research into what customers most wanted and fine-tuned by the group’s NatWest operation.
Ms Fouquier said studies showed owners of small businesses felt good connections were vital to success but many said they struggled to make contacts, in spite of the emergence of online networks.
“We see ourselves as a facilitator of that, we have got the connections and the scale,” said Ms Fouquier.
Boost will include regular events offering learning and networking opportunities.
The bank will hold a launch event at its Gogarburn conference centre in Edinburgh on Thursday, with speakers from the firm and businesses such as KPMG chartered accountants. ROYAL Bank of Scotland’s Boost scheme looks like a valuable initiative but may not do as much to repair the damage done to its reputation in small business circles by other actions as directors hope.
The giant lender is to be applauded for trying to use its sprawling network of connections and huge knowledge base to help firms deal with important issues, such as how to guard against cyber crime.
In a fast-changing world, small businesses are likely to appreciate the expertise on offer and related opportunities to make new connections.
But it will take lots of reports from happy users of Boost to help dispel the unease caused by the behaviour of Royal Bank’s Global Restructuring Group following the financial crisis.
In November, the City watchdog accused Royal Bank of “systematic” failings in the restructuring group, which led to the mistreatment of thousands of small business customers. The bank has set aside £400 million to compensate customers who complain about the unit’s behaviour.
While RBS insists it is open for business, small firms continue to face challenges obtaining credit on what they regard as suitable terms.
Other banks may face criticism for their lending records and for branch closures.
However, Royal Bank’s closure programme has been particularly high profile. The recent decision to close nine branches in Edinburgh likely did little to endear the brand to business or retail customers.
SUSAN FOUQUIER: Royal Bank’s head of business banking in Scotland said its lending activity has been strong.