The announcement that the Royal Bank of Scotland is planning to close nearly a third of its bank branches in Scotland will come as no surprise to those observers who have watched helplessly as the bank continues to struggle. Granted, in this sceptical commercial world, the bank may have over-estimated the number of branches deliberately, so that when they come to close a reduced number, the public outcry will be lessened. However that should be wishful thinking.
The proposed move highlights the wholesale contempt in which the bank holds both shareholders and customers, which is a modest fraction of the contempt they reserve for the UK government and banking regulators. Since the much-vaunted financial crisis of 2008, which was caused, in part, by sloppy British regulation spearheaded by Gordon Brown, British banks in general, and Scottish banks in particular, have carried on without a care in the world.
The despicable PPI scam was perpetrated after the 2008 crisis, demonstrating that the banks have learned very little from their mistakes and there may be other scams lurking, waiting to be exposed. There is no doubt that any such exposure will be the result of a whistle-blower rather than from the much promoted, but totally impotent, Financial Conduct Authority. It was hastily organised to replace the much disgraced and again, totally impotent, Financial Services Authority, which did not foresee the financial crisis of 2008 and did precious little to mitigate the impact when the crisis broke.
Government impotence exacerbates the potential for future banking scandals and the Royal Bank is pre-eminent in that sphere. It is scandalous that high-flying executives enjoy ridiculous bonuses, even now, whilst the bank continues to pay out fines to regulators for misdemeanours carried out by those same RBS executives. Additionally there is the looming iceberg of the dreaded RBS regeneration group which allegedly forced small businesses to take on unnecessary bank loans, only to have them called in unexpectedly, forcing bankruptcies where RBS would snatch assets and sell them off to other parties. Several court cases are under way.
To the innocent bystander, such allegations smack of insider trading whereby the bank allegedly obtained privileged commercial information about a company and then used it, again allegedly, to make money for the bank. No doubt some official at the world-famous Financial Conduct Authority will warm to this theme in due course, but do not hold your breath.
What is really scandalous, apart from the greed of bank officials and the casual detachment of regulators, matched only by the feckless attention from either Westminster or Holyrood, where politicians may nurse healthy bank overdrafts, is that few, if any, bankers have been brought to justice for their behaviour. Admittedly one London banker has been convicted of fixing LIBOR and sent to jail, but the FCA have not worked out that LIBOR is so complicated that it cannot be manipulated by one person. It needs a cabal of crooks, so where are the other multiple prosecutions, or is one enough to justify the department for another year?
Hindsight is a much easier science than foresight but history may record that the Bank of England should have let RBS follow Lehman Brothers, pour encourager les autres
, but it is not too late for the authorities to strike back effectively. It will be many years before RBS can be trusted again and the total absence of accountability will haunt the new blood which is trying to redeem the situation. One observation is that there is a UK driving offence known as 'causing death by dangerous driving.' It is not murder, it is not manslaughter, nor is it homicide. Simply, it is as exactly as stated on the tin. I recommend that there should be a new banking offence to be known as 'Causing death by dangerous and reckless banking.'
The regulators will argue that it will be almost impossible to prove that a death was caused by a remote banker but the number of suicides of banking customers since 2008 would suggest that there could be scope, particularly if suicide notes articulate the reasons for such desperate measures. Such a proposed offence would curtail the cavalier attitude of young RBS tearaways, possibly only temporarily, but it may cause them to stop and think before they go bonus-chasing at any cost. Clearly no banker is going to support such a suggestion and, through skilful manipulation of individual overdraft agreements, they may ensure indifference from politicians, but they must realise that desperate circumstances demand desperate measures and, above all, the Royal Bank is in a desperate situation with no obvious way out.
To the innocent reader with an RBS account there is always the opportunity to switch banks, but then one would have to look closely at the Bank of Scotland...oh dear.
SR welcomes short pieces in response to SR articles or to current events in general. Send to: Islay@scottishreview.net