In light of the resignation of Ross McEwan, Chief Executive of the Royal Bank of Scotland, Ian Fraser — author of Shredded: Inside RBS The Bank that Broke Britain — gives readers of Scottish Review of Books a short update on his reading of McEwan’s legacy.
Royal Bank of Scotland is back in the news after its chief executive of five and half years, Ross McEwan, threw in the towel. The New Zealander announced his resignation hours before the bank’s annual general meeting last Thursday, in a move that raised suspicions, as the bank had not yet named a successor. Having been watching the state-rescued institution for years, and McEwan’s struggle to “normalise” it since he took over the reins from Yorkshire-born investment banker Stephen Hester in October 2013, I can safely say he leaves a mixed legacy.
In financial terms, the banking group – which also owns NatWest, Coutts, Adam & Company, and Ulster Bank – is back in the black, paying shareholders a small dividend and hinting it might carry out share buybacks. It has a much higher capital ratio, meaning it is safer and less likely to blow up than at the time of its October 2008 collapse. After becoming the world’s most rapidly shrinking bank during McEwan’s time at the helm, the banking group is far smaller than in the heyday of Fred Goodwin, with a balance sheet that has shrunk from £2.4 trillion in 2008 to £694 billion today.
More negative aspects of McEwan’s reign include that 40,000 Royal Bank of Scotland employees have lost their jobs, bringing total staff numbers down to about 67,000 of whom some 14,000 (20 per cent) are now on modest wages in India. McEwan has axed more than 1,100 UK branches since taking the helm, and the taxpayers remaining stake in the bank is expected by the Office for Budget Responsibility be sold at a loss of £31 billion, after its share price plunged by 29 per cent during McEwan’s time in charge. Some of these things are considered a betrayal of the taxpayers who bailed it out.
Culturally and behaviourally, the turnaround of RBS is far from complete. That much became more evident with McEwan’s pugnacious, aggressive and obfuscatory handling of the global restructuring group scandal. On his watch senior executives at the bank, including him, took to calling the tens of thousands of UK business customers who complained that their firms had been pillaged, plundered and asset stripped by the infamous GRG, “chancers” who were “badmouthing” the bank. That was not a good look for McEwan.
This article was published in the Scottish Review of Books on 26 April 2019. Read the full article including Michael Fry’s review of Shredded: Inside RBS The Bank That Broke Britain in SRB.