Historic betrayal of RBS’S saviours
In October 2007, the biggest bank in the world was built in Scotland. Royal Bank of Scotland led a consortium which made a £71 billion bid for the Dutch mega bank ABN Amro.
The new concern was reportedly worth £2 trillion. The UK’S GDP at the time was only £1.4trn. Eyes were wide open, mouthes agape – Fred Goodwin, the chief executive of RBS, had pulled it off. Newspapers ran profiles with pictures of Goodwin headlined: “Is this the best banker in the world?”
It didn’t last. Round the corner in 2008, the sub-prime mortgage crisis was lurking. RBS, as one executive put it, had lent to everyone with a pulse. The onerous borrowing rates for the £71bn deal, and the subprime crisis, soon did for RBS. By November 2008 it came to light that the biggest bank in the world only had £3.60 to cover every £100 it had made in loans. That capital ratio had downfall written all over it. It cost the taxpayer £45.5bn to bail out the bank that was “too big to fail”, creating a financial hangover which lasted for a decade.
Then, three weeks before Christmas 2017, RBS’S present to its loyal customers who had stood by the bank all these years was to let them know that, by the end of June 2018, one in three local branches across Scotland was to close.
In 2010, bank executives had made a pledge of honour that they would never close a branch if it was “the last bank in town”. What pledge? Of the 62 branches facing the axe, 13 are the last branch in town.
Unite Scotland considers this is a betrayal of the Scottish people of historic proportions. Today representatives from the trade union will give evidence about the closure programme at the Scottish affairs committee in the House of Commons. We will tell the committee that, from day one, RBS has massaged the figures for the closures and, in effect, thrown away the rule book for banking standards to push them through.
RBS has told the people of Scotland that only 165 jobs are at stake. Their own documents show that if you don’t use the accountant’s friend, the “full-time equivalent”, as they have done, the actual headcount is 321 jobs.
The bank has taken out newspaper adverts to explain to the people that they will be grateful for the closures when they get used to banking with the ipad or a smartphone. Of course there are folk not quite up to speed with that digital stuff so RBS has created an army of what it calls “community bankers” to help bridge any temporary service gap that results for its older or infirm clients. But the newspaper ads don’t mention there will only be seven community bankers (yes, seven) for all of Scotland when the door is closed on the last of the 62 branches late in June.
The Access to Banking Standards protocol – the rule book for closures – says that banks have to produce an impact assessment for every branch it wishes to close, which explains the reasons for closure, and then engage with the local community. RBS has thrown that rule book out the window – instead of an impact assessment and community engagement, there’s a website to tell you how far it is to the nearest RBS branch that is still open. For the folk of Kyle of Lochalsh, that is a 34.5 mile journey to Portree on Skye.
Eilean Donan Castle near Kyle of Lochalsh is one of Scotland’s most popular tourist destinations. More than half a million tourists visit the castle every year, which makes bank business there run into the millions at the Kyle of Lochalsh RBS branch, one of the 62 set to go.
Never worry, RBS says all its local and international customers can use the local post office instead. Unite wonders how the local post office can deal with the current cashflows that the bank handles.
Meanwhile, the Mace Shop with its post office in Kyle of Lochalsh, is actually up for sale as the current owners are leaving. RBS’S Laurel-and-hardy post office prospectus would be funny if it wasn’t so serious – so is Prime Minister Theresa May’s insistence that she can’t do anything about this financial vandalism because it’s a “commercial decision” taken by RBS.
Like a lot of Mrs May’s utterances, this is preposterous. RBS was bailed out by the taxpayer to the tune of £45.5bn. We, the taxpayers, own 71 per cent of it.
Ian Fraser’s excellent book, Shredded: Inside RBS, demonstrates that the UK government has been hands-on for RBS since it was saved from going bust. Are we to believe the government did not intervene when Stephen Hester, the former RBS chief executive, was sacked and the new chief, Ross Mcewan, appointed?
The real reason we are being treated to these fables is that Mrs May and her Cabinet are in cahoots with the RBS chiefs. They both want to see the bank privatised, and the closure programme is to make the bank a more attractive investment proposition for their City pals. The dogs in the street know that.
They also know that Mcewan, RBS’S £3.5m-a-year chief, is refusing to say anything about the closures as he is rumoured to be in line for a job offer from the Commonwealth Bank of Australia.
These days the bank chiefs like to tell us that RBS is not Royal Bank of Scotland but Royal Bank for Scotland. Unite thinks it is Royal Bank for Smoke-and-mirrors. Today the members of the Scottish affairs committee must hold it to account. l Pat Rafferty is the regional secretary of Unite Scotland
Closure of branches is
designed to help the UK government sell off its shares, writes union
official Pat Rafferty