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Editor's Blog
Editor's Blog
Blogs » Editor's Blog

Pleasing The Shareholders?

The Times newspaper the other day commented that Stephen Hester, the CEO of Royal Bank of Scotland Group, had made sterling efforts to shrink the bank which "have pleased the bank's shareholders".

The Times made this comment in a speculative article which also mused that Mr Hester might be thinking of leaving the bank to go to an unspecified place where his "talents will be more appreciated".

The first thing to note is that since 80% plus of Royal Bank of Scotland Group is owned by the UK Government, it is hard to understand which shareholders are currently pleased by the "sterling efforts" of the CEO.

Whilst it is wrong to blame one man for the woes of any large organisation, it is fair to comment that Stephen's 5 year reign has not exactly seen RBS rise like a Phoenix.

Assets sold at a fraction of their cost price; job cuts; massive payments due to the PPI claims; the issue of LIBOR fixing; failure to lend sufficient money to businesses; reduction in service provision for basic account customers ......
Hardly a tale of startling success.

In some ways it is not easy working for banks at the moment . There are many thousands of bank staff doing their level best in difficult circumstances.

The fact remains, however, that banks like RBS are not doing enough to help power the recovery of the UK economy. As a direct result, GDP and employment growth are both suffering. With more than 80% of the bank effectively owned by the UK public, RBS can only please these shareholders by helping to lead the recovery. Being known as "the incredible shrinking bank", isn't the kind of leadership required.
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Tuesday, 19th March 2013

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