THE head of tax-payer-owned Royal Bank of Scotland (RBS) has said he cannot guarantee that financial scandals will not happen again while he is in charge.
However, one thing New Zealander Ross McEwan could guarantee is that another financial crash is coming, but that banks and regulators would be more prepared this time.
He said: “The 2008 crisis was enormous, and it was a build-up of probably a decade plus of debts being built up, and bank acquisitions that were poorly funded, and a whole raft of issues. But I think of course there will be another financial stress in some point in time – be it a crisis or a recession of sorts.”
McEwan said banks were now better protected against a full-blown crisis, after being forced by regulators to build up capital cushions to levels that are up to three to four times what they were before the 2008 crash.
He said: “It’s not going to be such an impact on the banks and its customers again. But will it happen again? You can pretty well guarantee it, but what shape or form it comes in, I couldn’t guess.”
McEwan stressed efforts to “rethink the business” and take customers into consideration in “every change we make” had reduced the chance that RBS will be hit with further conduct and litigation issues, but stopped short of promising that RBS would have a clean record during his tenure: “Can I say this will never happen again? I’m sorry, I can’t. We still employ 70,000 people, we still have a very large balance sheet and business and it’s much simpler. It’s not a simple bank like many others, but I think we’ve put things in place now that we minimise any of those issues.
“I think there is a much lesser chance that we will have any of those big issues that we’ve dealt with like PPI, which is an industry issue, and GRG [Global Restructuring Group]. We didn’t manage our customers at a time when they needed to be looked after and managed,” he continued
“We did a very bad job,” He admitted.
“But today our organisation is very focused on the customer and we did put things in place and had the conversations before we made those changes, and so I think there’s a much lesser chance.”
The RBS chief was speaking to the Press Association around the 10-year anniversary of the bank’s £45 billion government bailout, which contributed to a financial crisis that still haunts the UK financial sector a decade on.
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