Senin, 25 Juni 2012

ALEX BRUMMER: Don't blame Fred Goodwin RBS for problems this time

ALEX BRUMMER: Don't blame Fred Goodwin RBS for problems this time

By Alex Brummer

PUBLISHED: 16:05 EST, 25 June 2012 | UPDATED: 16:05 EST, 25 June 2012

Royal Bank of Scotland boss Stephen Hester

In the firing line: Royal Bank of Scotland boss Stephen Hester

If Stephen Hester were a slightly more sympathetic figure, rather than blustering about the great favour he is doing for the taxpayer, one might almost feel sorry for him.

After all he cannot be personally blamed for the computer snafu that brought transactions at NatWest, Ulster Bank and parent Royal Bank of Scotland crashing down.

What he and the bank can be blamed for is a catastrophic communications breakdown. It has not treated customers, shareholders and the public as grown-ups. Instead of a proper explanation of how the systems went wrong, what caused the problem, the volume of transactions affected and the number of customers damaged, the nation has been treated to public relations twaddle of the worst kind.

Moreover, it wasn’t until three or four days into the problem that Hester emerged from the shadows, with a personal apology.

Hester would no doubt argue that he was hired to de-risk RBS and remove the shadow of Fred Goodwin. Indeed, some bank insiders have decided to make Goodwin and his obsession with low costs â€" except when it came to his own capacious offices and suite at the Savoy â€" the scapegoat for what has happened.

Perhaps, but it is nearly four years since Goodwin was jettisoned and I can still remember a member of his IT team briefing on how brilliant systems investment was one of the keys to its low cost banking.

What we do know is the effort that NatWest has made to detoxify the brand and disassociate itself from its Scottish parent through its customer friendly promotions is now as dust. The staff may be courteous under difficult circumstances, but in order to try to set up a standing order last week the clerk had to resort to writing himself a note with biro on a NatWest notepad.

All that was missing was the quill pen. Maybe that has been saved for the Coutts offshoot.

It is everyone’s nightmare in an age of mass banking to think that electronic transfers are caught somewhere in a digital netherworld from which they may never emerge.

One cannot help but believe that as far as Hester is concerned NatWest always has been the poor relation, that runs itself by charging excessive fees for overdrafts and over-charging for card services, while he as chief executive twiddles the controls at the investment bank in the vain hope that the profits woul d come pouring forth.

It hasn’t quite happened like that and for the second year in a row Hester could well find his bonus endangered as the bank is forced into compensation and claw-back comes into play. He may consider walking away. But there might not be quite so many open doors after this command and control fiasco.

Basle barks

The Bank for International Settlements, a throwback to reparation payments after the Great War, is perhaps the least understood of the global financial institutions.

Known informally as the central bankers’ club, it is on its grand premises that the safety rules for the world’s most important banks are worked out.

In its just-published annual report the Basle bank has a new target: the central banks themselves. It argues that the extraordinary measures taken by central banks around the world, from the Bank of England to the Federal Reserve, to deal with post-panic stresses may have gone too far.

Balance sheets have ballooned to $18trillion and now represent 30 per cent of world output.

It argues that this largesse is far from being pain free. It gives governments an excuse not to reform their economies, slows down the recognition of rotten loans and warps financial markets. Most seriously of all it blurs their independence from government, something that Sir Mervyn King, among others, is worried about.

Maybe, but better this than the mass unemployment and depression of the 1930s.

Bradford divorce

In times of difficulty all companies need a steady pair of hands behind the scenes.

Richard Pennycook has fulfilled that role at grocer Wm Morrison post the troublesome Safeway takeover. He is now departing and leaves behind a group that is leaking market share and still has founder Sir Ken Morrison sniping from the side lines.

It is something of a compliment to Pennycook that £120m was knocked off the company’s value on the announcement.

As finance director he has played second fiddle for a long time first to Marc Bolland and now Dalton Philips.

Morrison may have trouble regaining momentum at a time when Tesco is seeking to reinvigorate its domestic offering, with all kinds of whizz-bang, on-line tricks.

Here's what other readers have said. Why not add your thoughts, or debate this issue live on our message boards.

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" After all he [Hestor] cannot be personally blamed for the computer snafu that brought transactions at NatWest, Ulster Bank and parent Royal Bank of Scotland crashing down....." Maybe not, Alex. But responsibility should not be confused with accountability. Like the captain of a ship or plane Mr Hestor is ultimately accountable for everything that happens in the bank while he is in charge. Bank customers can't seek redress from a computer programmer in India.

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RBS IT transferred to India, what did RBS expect. Vote with your feet, and don't just rely on one bank.

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