RBS Works at Pleasing Master, Clients

LONDON—Last summer, Adrian Eady, a banker with Royal Bank of Scotland Group RBS, was nearly crushed hauling a crate of feta cheese off a forklift truck in a North London warehouse.

A few months earlier, the state-controlled bank sent Mr. Eady to wear an apron and serve cappuccinos in a cafe. Before that, he was selling novelty greeting cards in a shop.

Following a political uproar over a lack of bank lending to small businesses, 81%-government-owned RBS created its “Working With You” program. All RBS corporate bankers must spend at least two days a year working for a customer free of charge.

“We do anything they ask,” Mr. Eady says. “If they say ‘make the tea,’ then we make the tea.”

It is an example of the extensive pains RBS is taking to try to appease its masters and customers after six years of withering criticism for everything from excessive pay for executives and top bankers to a lack of small-business lending.

The new CEO, Ross McEwan, publicly agreed with U.K. Chancellor of the Exchequer George Osborne’s view that RBS must refocus on its U.K. retail and corporate market. RBS hired former Bank of England official Andrew Large, who produced a 95-page report on how it could do better at small-business lending. This week, the bank will present a new strategy aimed at cutting back office costs, slimming its global footprint and restructuring its corporate bank.

Perhaps more damaging are allegations by a government adviser that the bank is failing its customers. RBS, like its peers, faces rampant complaints that it isn’t lending enough to small businesses and is hampering economic growth. The adviser, Lawrence Tomlinson, alleged to a parliamentary committee that RBS forced several small businesses into default to seize their assets for a profit. “It seems to be systematic to me,” Mr. Tomlinson said. RBS denies this allegation.

Given the public debate over small-business lending, RBS is taking action to shake up its corporate bank, introducing new services and shuffling the unit’s management, according to a person close to the company.

It also is trying to drum up demand for loans. The bank sent hundreds of relationship bankers, who work with specific clients, to deliver letters to small businesses offering them credit. Since 2011, RBS also sends corporate bankers to work in customers’ businesses. The aim is for bankers to see things from a customer’s perspective and better understand the businesses that they lend to.

via RBS Works at Pleasing Master, Clients – WSJ Article by Max Colchester.

RBS Full Report – How to improve SMB Lending – PDF

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