Royal’s ownership of Coutts looks increasingly incongruous
March 2nd, 2010
What’s going on at RBS Wealth, the division of the state-owned Edinburgh-based Royal Bank of Scotland that caters to the needs of wealthier customers through brands like Queen’s bankers, Coutts & Co, and the comparative Scottish upstart, Adam & Co?
Apart from anything else, isn’t it incongruous that a government which purports to be dedicated to rooting out tax evasion should own a bank that specializes in enabling its customers to do … exactly that? (For more on this theme, see this recent Bloomberg article).
Other bizarre goings on include that RBS has in recent months cleared out the board of Scottish private banking subsidiary Adam & Company, sacking all but one of the private bank/wealth manager’s ten directors (according to Companies House records) and seizing operational control of the formerly arms-length offshoot (see my recent article Adam & Co board cleared out).
The bank has instead installed several Coutts executives, including Coutts’s chief executive Michael Morley and Coutts’s finance director James Rawlingson neither of whom have much knowledge or experience of the Scottish market. The net result is that Adam & Co staff will lose any ability to make independent judgements or decisions for their clients and the bank will be homogenised onto the same RBS Wealt platform which seemed to have no qualms about mis-selling the AIG Enhanced Fund as near-cash.
Last month John Baines, who oversaw both banks as chief executive of RBS’s Wealth Management mysteriously resigned. This came amid continuing fury from Coutts customers who claim that Coutts steered them into crap investments — mainly disastrous AIG funds — that were far riskier than the bank claimed and which have tied up large chunks of their capital.
Coutts has also suffered an employee exodus in Singapore, which has crippled its ability to operate in the world’s fastest-growing region for private banking. Hanspeter Brunner, who ran Coutts’s Asia private banking division, defected to BSI Bank, taking about 70 Singapore-based Coutts employee s with him. RBS chief executive Stephen Hester has acknowledged that the state-owned bank is walking a “tightrope” when seeking to recruit and retain top bankers while under UK government control.
Most other wealth management professionals believe that it’s only a matter of time before RBS accepts the inevitable and puts Coutts and Adam & Co on the block.