If you ever want to know about the trail of greed, incompetence and lies that led to the collapse of the Royal Bank of Scotland then you must read Shredded: Inside RBS, the Bank That Broke Britain by Ian Fraser.
Almost four years have elapsed since it was published and it seems that almost every week another tale emerges to underline just how disgusting the behaviour of RBS continues to be.
I think that many of us, if asked to define morality, might choose to espouse something about common decency towards our fellow human beings. Perhaps we might extend this a degree further and say that it ought also to include an awareness of the impact of our behaviour on the lives and persons of those around us. If these are indeed reasonable approximations of basic morality, then it is clear that RBS has a problem in this area.
The first few hundred pages of Shredded are replete with tales of the sinister capriciousness of Fred Goodwin, the CEO of RBS. They also detail the sycophancy of his senior directors, which prevented any of them doing their duty and questioning his vain recklessness.
But it’s only as you near the end of this tumultuous book that you become aware of something genuinely and profoundly shocking: that this was an institution that had chosen long before to repudiate the human factor in its crazy obsession with becoming one of the world’s top four financial institutions.
Its customers only wanted it to dispense its duties to them regularly, honestly and perhaps even with a degree of compassion and understanding in periods of financial uncertainty or hardship. But what do they know?
Last week, we were treated to another of those little stitches that had come undone from this tapestry of greed and inhumanity. It concerned a memo written in 2009 by a manager at RBS, offering advice to colleagues on how to deal with small businesses that were encountering difficulties in repaying loans.
“Sometimes you need to let customers hang themselves. You have then gained their trust and they know what’s coming when they fail to deliver… Missed opportunities will mean missed bonuses.”
The memo was given to Westminster’s treasury committee as it listened to revelations about the business lending practices of the bank’s controversial global restructuring group. This outfit, which operated like a corporate death squad, harried customers into emergency arrangements before turning off the life support. Who cared how many lives were destroyed and jobs lost? Just so long as budgets were hit and bonuses were earned at the bank that the public bailed out with £45bn.
In another Westminster meeting-room last Wednesday, the current RBS chief executive, Ross McEwan, faced questioning from the Scottish affairs select committee of the House of Commons over the bank’s programme of closures throughout Scotland.
Once more, it wasn’t the detail of the 62 branch closures that shocked, or even the scale, but the way in which the human factor had been stripped out of the bank’s calculations and projections.
In bald terms, a case can be made for shutting some branches. This is a country in which lives are now largely administered via apps on a smartphone. Visiting customers at many bank branches are diminishing and there needs to be a drastic change in the way that banks dispense their services.
RBS, which is already under pressure from the government to start turning its continuing losses into profits, has decided that the answer in Scotland is to shut one-third of its branches. Yet it is facing accusations that its projected scale of job losses is inexplicably low and that it has failed adequately to explain why the branch closures are happening.
Bizarrely, RBS claims that its replacement services will be an improvement on what was previously on offer. How fewer than 10 community bankers will be better than 62 branches isn’t immediately explained.
Unite Scotland says: “We believe RBS has breached the banking industry protocols for branch closures. The ‘Access to Banking Protocol’ and the ‘Access to Banking Standard’ both make it incumbent for a bank to produce an impact assessment for every branch closure and engage with local customers and stakeholders about the impact assessment.”
This response, although robust, only hints at the inhumanity at the heart of the RBS proposals. Many elderly people, and those of diminishing mental capacity, still prefer to use old banking methods. Leaving rural and outlying areas with no access to this type of banking, when there are plans to close ATM machines, could have a crippling effect on their lives.
Fears about the ability to pay for food and energy become very real. The physical nature of Scotland means that there are more of these communities, with more people affected like this, than other part of the UK. The Barnett formula exists to take account of the extra cost in providing services to these places.
Basically, what RBS is saying is: “We don’t really care about these people. They are the wrong type of people, living in the wrong types of places and behaving the wrong sort of way. They cost us money.” They are people whose parents and grandparents used this bank and whom the bank, like other banks, casually exploited in charges and crippling loan rates.
Stripping away the least profitable parts of a business, in the way RBS has done with its branch closures, is often the first step towards a big, juicy private sale. Surely the government wouldn’t allow this to happen at an institution in which the UK taxpayer holds the biggest stake?