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Sharing the windfall

The Royal Bank of Scotland's $1.4-billion profit doesn't seem to benefit the customers or its employees

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Sunanda K Datta-Ray New Delhi
Last Updated : Aug 10 2013 | 12:13 AM IST
As soon as the Royal Bank of Scotland (RBS), staggering under last year's £1.7-billion loss, announced a £1.4-billion profit, I trotted round to the Kensington branch to suggest they restore the Financial Times.

"The Financial Times?" the plump blonde behind the counter asked in such bewilderment I realised she hadn't heard of it. "Yes" I explained, "the financial paper that used to be there" I said, pointing to the coffee table between the arm chairs in the visitors waiting area. "The pink one," I added because unlike India, Britain has only one pink newspaper. The "football pink" of my prehistoric teens has long gone.

Not only had she never heard of the FT, she hadn't worked long enough to know the generous past when the Archbishop of Canterbury wouldn't have called banks socially useless. Nevertheless, she was a friendly lass. "If it's a financial paper you'd like" she gushed, "I'll grab a copy of A.M. for you at High Street Kensington station. I don't mind!"

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That was sweet of her, but not what I wanted. City A.M., with "Business With Personality" printed under the title, is a 24-page tabloid that the same Indian boys (at least they look the same to me) who press free copies of the Russian-owned Evening Standard on passers-by every afternoon at stations and street corners distribute at the same locations early in the morning. It splurged out the other day on 30-year-old Deepinder Goyal whose Zomato, apparently "South Asia's largest restaurant and nightlife guide", broke into London earlier this year. I would go out of my way to patronise a paper that promotes young Indian entrepreneurs but A.M. isn't the FT.

So, I suggested another way the RBS could share its windfall with the public without straining its staff's intellectual powers. "Remember the coffee machine there?" I asked, pointing to an empty table at the back, and she responded immediately. "Wasn't it lovely?" she breathed "You got chocolate and other hot drinks too!" Her face lit up at the recollection. So, probably, did mine. I would pop in on cold days even last November for a hot sweet drink and to browse through the FT. But the table was bare when I returned to London in July.

It needn't remain so, I said, not when the bank's making money. And going by reports, conserving it too. Britain's ailing banks have lately had to lure outsiders with huge financial incentives to take up senior positions. But since Ross McEwan, the new RBS boss, was already on the staff, he's promised to make ends meet on a mere £1 million a year against his predecessor's £1.2 million. Not only that. The modest McEwan will also waive his bonus this year and the next. There should be quite a bit left over, especially if RBS manages to sell off 316 branches.

One hears dire stories of how banking has deteriorated since the grim crisis of 2008 when the government had to rescue RBS by taking over 81 per cent of equity. The FT and vending machine weren't the only savings. So far as I can make out, the other economies were also at the public's cost. A client with millions in the bank will get only £85,000 if it goes bust. The retail banking staff gets no bonus. To the horror of older employees, new recruits are engaged without security checks.

The blonde girl's eyes popped out when I told her that my son, then at boarding school in Hertfordshire, found reasons to make frequent trips to London around Christmas when Grindlays' St James's Square branch laid out mulled wine and mince pies for all comers. "So did we when times were good!" indignantly exclaimed an older RBS officer.

So why not restore the FT, coffee machine and even mulled wine and mince pies now that times are better? Or are they? Despite McEwan's seeming frugality, the European Banking Association accuses Britain of squandering more money than any other European country on sustaining the champagne lifestyle of top bankers. Profit notwithstanding, RBS shares fell by 5 per cent and then 3.3 per cent reminding me of a lavish-spending Indian tea-garden owner whose gardens always posted a loss. "We can't afford to show a profit," he pleaded.

Mysterious are the ways of finance. A banker isn't someone who lends you an umbrella when it's dry to grab it back when it pours, as Mark Twain thought. He merely demands a fee. The stronger the downpour, the higher the fee.

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Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper

First Published: Aug 09 2013 | 9:45 PM IST

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