IT was hardly to be expected that the Royal Bank of Scotland's quarterly results which were published today would signal that the institution has made anything like a full recovery from its recent woes. But there are at least encouraging signs that chief executive Stephen Hester and his new team are beginning to turn its fortunes around.
By Mr Hester's own admission there is no quick fix and he fully expects that if the bank is ever again to be entirely privately owned, the task will take between three and five years. But at least he now has his own team at the helm.
The last of
Sir Fred Goodwin's men – whose poor decision making brought the bank to its knees – announced his departure this week. Deputy chief executive Gordon Pell will stand down next year and leave with his pockets stuffed full of gold – a pension pot of £9.8 million. Who says failure doesn't pay?
Even though the last of the old guards is on the way out, the task for Mr Hester remains immense. To turn the ship around he intends to make £2.5 billion of savings over the next three years and that means shedding at least 9,000 jobs – some of which will inevitably be in Edinburgh.
But despite this slimming down RBS will still remain one of the city's major institutions and employers. And it is to be hoped that some pride will in time will be salvaged from the financial ashes that were created during its collapse.
The same can be wished for Bank of Scotland, now owned by Lloyds. Yesterday it revealed the legacy of reckless lending at the former HBOS will result in the parent company writing off £11bn of bad debt this year alone. The forecast sent all too familiar jitters through the markets with shares plunging by up to 15 per cent at one point, although they later rallied.
Like RBS the road to recovery for the BoS brand will also be long and fraught. But despite both organisations being now largely owned by the government – which was forced to step in with a multi-million rescue packages for each – at present there is at least some optimism that both are on the right road.
Edinburgh may never again have two major independent world-class banks headquartered here but at least there is the prospect of it retaining two major financial institutions. And that is vital not only for the economic status of the city but for preserving the jobs of tens of thousands who directly rely on banking, and indirectly on jobs in support industries, to make a living.
The full article contains 452 words and appears in Edinburgh Evening News newspaper.
