James Moore: How much longer can this crumbling house of horrors stay in one piece?

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The Independent Online

Outlook Yes, Royal Bank of Scotland is facing a scandal (again). It's an IT snafu this time (another). And Ross McEwan, the chief executive, has said he's very sorry (again) while describing it as "unacceptable". In that he's aping Supernanny Jo Frost, the Channel 4 childcare "specialist", whom it was at one time impossible to avoid. Sadly, it seems it will take more than the ubiquitous Ms Frost and her patented naughty step to turn this recalcitrant child around.

The trouble with IT glitches is that they almost always get worse before they get better. Distressed RBS customers duly took to the airwaves and the web to tell a series of horror stories that demonstrated this. One even reported that their salary had vanished. That was a little ungrateful of them. After all, it is bonus time at RBS and the bank does have to find the £500m it wants to shower on its top staff from somewhere. Don't customers realise these people have third homes to finance?

Fear not, the bank says, we'll compensate anyone for any losses incurred. But does that pledge cover a customer losing out on a one-off cyber Monday offer on a new laptop? As Mr McEwan noted, his retail bank has suffered from years of underinvestment in IT. It could do with more than a few new laptops. His problem is this: why should customers put up with these failures while he gets them fixed? Switching bank accounts is a pain, but this may serve as the final straw for many.

In the investment bank we've had the Libor scandal, with another one brewing in foreign exchange. In the commercial bank the Global Reconstruction Group is being investigated by almost every agency that investigates. Now, for the second time, the retail bank has a badly misfiring IT system.

Next time you hear a chairman trying to justify a grotesque pay package by talking about how wonderful their CEO is and how hard "top business talent" is to find, it is worth remembering that those arguments were deployed to defend the enormous sums handed to Fred Goodwin, the man who built this shop of horrors.

The real question now is whether RBS in its current form can ever become something like a functional bank? Or might we be better knocking over its crumbling edifice and then breaking it up before it collapses in front on us? A group of investment bankers hired by the Government to get the answer it wanted recommended against that. Perhaps their work should be revisited.