Outgoing Royal Bank of Scotland (RBS.L) CEO Ross McEwan leaves a “patchy” record with one “huge blot in his copy book,” according to the man who wrote one of the most in-depth books about the lender.
RBS announced last month that McEwan plans to leave the bank after almost 5 years in charge. McEwan said in a statement at the time that he was leaving the bank on “a strong and profitable footing.” Chairman Howard Davies thanked him for “one of the biggest UK corporate turnarounds in history.”
However, author and journalist Ian Fraser told Yahoo Finance UK he thinks McEwan’s record is “patchy” and said his handling of the bank’s Global Restructuring Group (GRG) scandal has been “a huge blot in his copy book.”
“Almost every single response that he has made to the GRG scandal has been flawed and part of a determined effort to downplay, minimise, and/or whitewash the entire thing,” Fraser told Yahoo Finance UK.
“This is a huge blot in his copy book. It’s where his whole tenure as RBS CEO potentially falls down.”
Fraser is the author of “Shredded: Insider RBS, the bank that broke Britain.” The 2014 book traced the rise of the bank to the world’s biggest before its catastrophic collapse in the 2008 financial crisis. He has recently updated the book the cover McEwan’s tenure at the bank.
‘Widespread inappropriate treatment’
One of the new chapter’s in the updated edition deals with the fall-out from RBS’ GRG unit. The unit, which operated between 2005 and 2013, promised to help turn around struggling small and medium sized businesses (SMEs). But many companies complained they were pushed into bankruptcy by the unit to be asset stripped by RBS.
RBS repeatedly denied these claims but a report into the affair published in 2018 found “widespread inappropriate treatment of customers” by the unit. RBS set aside £400m in 2016 to compensate mistreated businesses. The scheme was shut last year.
While the majority of wrongdoing occurred before McEwan took charge of the bank, Fraser criticised his handling of the crisis.
“The overall stance — and McEwan has been deeply culpable of this — has been to try and bury the scandal,” Fraser told Yahoo Finance UK.
McEwan initially claimed that the unit helped the “vast majority” of businesses it dealt with but was forced to admit this was not correct when probed by MPs.
“I think basically his stance on GRG has been aggressive, pugnacious, in denial, refusing to fully acknowledge the harm that GRG caused to SMEs up and down the UK,” Fraser said.
“I describe an incident where he had dinner with MPs and he basically loses his rag because they start asking him about the mistreatment of SMEs by Global Restructuring Group.
“Rather than entering into some reasoned discussion about GRG’s behaviour, he flew off the handle and started effing and blinding and allegedly calling GRG customers who complained chancers. He urged them to stop bad mouthing RBS.
“I think this was a very bad look, as I say in the new edition. The chief executive of a FTSE 100 company shouldn’t be calling its own customers chancers, especially ones which have been as badly treated as the ones of GRG were.”
RBS declined to comment on the specific incident.
A spokesperson for the bank pointed Yahoo Finance UK to a past comment by McEwan, in which he said: “We have acknowledged for some time that mistakes were made and have apologised that we did not always provide the level of service and understanding we should have done for these customers in the aftermath of the financial crisis. The most serious allegations made against the bank have not been upheld.”
While Fraser criticised McEwan’s handling of the GRG scandal, he said the New Zealand-born CEO had made progress elsewhere.
“In terms of shrinking the bank, he’s made impressive strides,” Fraser said. “In terms of normalising RBS, i.e. returning it to profit, returning it to dividend payments, removing the constant threat of massive so-called legacy issues rearing their ugly head every few months or weeks, abandoning any intention of world domination — he has achieved a lot.”
“And it’s been hard,” Fraser said. “Shrinking a bank is actually far more difficult than most people would imagine. There’s a lot of complexity involved.”
Fraser caveated this by saying RBS is still set to miss targets on return on equity by 2020 and pointed out that the share price has fallen by a third since McEwan took over.
“Even in the financial sense, his success is mixed,” Fraser said.
RBS has appointed executive search firm Spencer Stuart to start a world-wide search for McEwan’s successor. Alison Rose, deputy CEO of Natwest and CEO of commercial and private banking at RBS, has emerged as an early front runner.
“Even now it’s a bit of a poison chalice,” Fraser said of the top job. “We’ve got a largely-state owned bank which is dependant for its growth and financial success on a very limited geography whose economic fortunes are uncertain as a result of Brexit. It’s going to be a tough challenge.”
Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at@OscarWGrut.