October 1st Article By Jessica Winch The Telegraph
Stephen Hester: RBS is 'poster child' for banking failures
Stephen Hester, chief executive of Royal Bank of Scotland, has admitted the institution is a “British poster child for what went wrong in banking”.
Stephen Hester said RBS was
resting on a 'wafer thin capital base' before its collapse Photo: Reuters
In a speech to students and staff at the London School of Economics, Mr Hester said: “The banking industry in the decade preceding the crisis was focused on income, it expanded too fast, prioritised sales over service and failed to properly balance the interests of its customers and shareholders with those of its managers.”
In a speech that promised to speak “candidly” about his task of saving a failed bank and the transformation of the banking sector more generally, Mr Hester said the industry needed to make a “new compact” with society, where customer service comes first.
Mr Hester said RBS, which is 82pc owned by the British taxpayer, had already made progress towards this goal, including reforming staff pay such as paying bonuses in shares instead of cash.
In a speech to students and staff at the London School of Economics, Mr Hester said: “The banking industry in the decade preceding the crisis was focused on income, it expanded too fast, prioritised sales over service and failed to properly balance the interests of its customers and shareholders with those of its managers.”
The banking veteran said RBS was resting on a “wafer thin
capital base” before its collapse and had “effectively run out of money to fund
itself and its customers”.
In a speech that promised to speak “candidly” about his task of saving a failed bank and the transformation of the banking sector more generally, Mr Hester said the industry needed to make a “new compact” with society, where customer service comes first.
Mr Hester said RBS, which is 82pc owned by the British taxpayer, had already made progress towards this goal, including reforming staff pay such as paying bonuses in shares instead of cash.
But he said that pay reform “has to go further” to take account of customer
service as well as sales.
The 51 year-old said RBS had about 15 months of “heavy lifting” to complete
in order to stand by its five-year recovery plan, although he warned the bank
was not “out of the woods” as the bank still depended on the health of the
economy.
Referring to the wider reform of the banking industry, Mr Hester said change was necessary but called current levels of public hostility towards bankers “particularly unhealthy”.
He said the “many scandals” that have hit banking in recent years, such as the Libor-fixing scandal, were not unique problems. “I think it’s more accurate to say that most of them are related to one big scandal: banks have simply not been good enough servants of their customers in the recent past,” he said.
On Monday, the Co-Operative Banking Group announced a quarterly reward scheme for branch-based employees that is based purely on customer service.
Referring to the wider reform of the banking industry, Mr Hester said change was necessary but called current levels of public hostility towards bankers “particularly unhealthy”.
He said the “many scandals” that have hit banking in recent years, such as the Libor-fixing scandal, were not unique problems. “I think it’s more accurate to say that most of them are related to one big scandal: banks have simply not been good enough servants of their customers in the recent past,” he said.
On Monday, the Co-Operative Banking Group announced a quarterly reward scheme for branch-based employees that is based purely on customer service.
No comments:
Post a Comment