The last thing a retail banking group should be is exciting

No more outsized betting in the global casino


Not so long ago, Royal Bank of Scotland was – unbeknown to many of us – one of the more exciting finance houses around. If exciting is defined as overambitious, over-leveraged and overexposed to incomprehensibly complex and risky financial instruments, that is. Five years and £45bn of public money later, Ross McEwan – who took over as the chief executive in October – has an altogether different future in mind.

Earlier this week, Mr McEwan appeared in a video on the bank’s website stating his view: “My aspiration is not to run the world’s biggest bank. My aspiration is to run the best bank in the UK.” Now, the scale of his plans is starting to become clear. RBS is reportedly set for a massive restructuring that will dramatically cut its size, all but eliminating the “casino” investment banking business and slashing as many as 30,000 staff.

Over the next few years, the bank is expected to offload Citizens (the US arm it has long been keen to jettison), to roll its remaining investment operations into its corporate division (to service big-business clients only), and to spin off its Williams & Glyn’s retail brand (comprising 300-plus branches that it tried, and failed, to sell to Santander in 2012).

All of this will help to boost the all-important ratio between RBS’s capital and the risks to which it is exposed, to the levels deemed respectable following the financial crisis. It will also turn one of the City’s more buccaneering financial outfits into something much closer to the traditional, boring old domestic bank again. No more outsized betting in the global casino, just old-fashioned lending to British households and British businesses.

Good thing, too. There are downsides here. Many RBS employees will keep their jobs as their divisions are being either spun off or sold, but there will be swathes of redundancies, too. Any hope of an imminent sale of the taxpayers’ stake has also just evaporated; given the length of time all this will take, and the turmoil it will create, RBS’s finances – and share price – have far from rosy short-term prospects. Even so, Mr McEwan is on the right track. After the spills of recent years, the more boring the bank, the better.

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