May 5, 2016

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Filing into the cavernous, purpose-built Gogarburn centre just outside of Edinburgh, it’s hard not to marvel at the arrogance of the RBS bank and its top management in the years that led to the crisis. The bank proved horrendously overexposed when the crisis hit, yet Fred “The Shred” Goodwin and his clique thought it appropriate to build this massive monument to their own magnificence, like a self-aggrandising cenotaph or a headstone to their own hubris.

8 years on from the crisis and the faces have changed, but many of the issues remain the same. RBS boldly proclaims to be a “bank that earns your trust”, and that “the future is not about us, it’s about our customers”. Yet behind the fancy phrases and meaningless marketing remains a bank that is hard-wired to serve vested interests over the public interest.

How else can you describe a bank that is headquartered in Edinburgh and which was built on that City’s famous financial history, yet is happy to run that same city into the ground through punitive interest rates and punishing, potentially illegal LOBO loans? Edinburgh Council pays £119m servicing such debts, accounting for 50% of its budget.

Incredibly, the CEO Ross McEwan claims that ‘teaser rates’ on loans are a “personal bugbear” that he wants to stamp out at RBS – yet this is exactly what around 100 councils have to suffer from RBS from their LOBO loans, with teaser rates bring replaced by sky-high interest rate-hikes, and with break clauses written so high into the contract that they effectively prevent the councils from ending or renegotiating these loans. In councils like cash-strapped Newham, 80p in every £1 residents give over in council tax goes directly to serving these debts. Hardly a bank that earns your trust, let alone operates in the public interest.

Ross McEwan and the rest of the board were unmoved on our questions on LOBO loans. McEwan flatly disagreed that local authorities should be treated as retail investors, as they now are across Europe, rather than sophisticated investors who are expected to have a greater degree of financial expertise.

Treating councils as sophisticated investors allows banks including RBS to rip these councils off with impunity. Consequently, McEwan also refused to concede that these LOBO loans had been mis-sold, or that the contracts should be ripped up or even renegotiated. Our friends at Debt Resistance UK continue to campaign to end these usurious loans, which you can check out here.

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A major recurring theme of this years AGM was branch closures, with another three questions levelled at the board following sustained criticism on this issue last year. In 2015 the outgoing Chairman, Philip Hammond, warned of more branch closures to come – and he wasn’t lying. 1 in every 3 branch closures is of an RBS-owned branch (which includes NatWest). Half of all particularly damaging last bank in town closures are also of RBS-owned branches – despite the 2010 promise “never” to close a last bank in town.

The bank claims again and again that these closures are due to declining footfall and the need to cut costs, but those excuses seem snake-tongued when the retail bank (that owns and operates those branches) made £1.2 billion profit last year, despite writing off almost £1 billion as compensation for criminal, illegal, and litigious activity.

In other words, the bank could comfortably afford to keep all current branches open and it would still make more than £2 billion profit from them every year, before the impact of the bank’s criminal behaviour kicks in, naturally.

And as for declining footfall, there are widespread accusations of misquoted facts and massaged figures to make branches in poor areas seem less used, and branches in rich areas seem more used. Whether it’s posting cheques en mass to be processed in more affluently-located branches, or simply understating branch usage figures, we’ve heard too many of these accusations for the bank to “earn our trust”.

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There is an overtly moral dimension to this malaise too. RBS was saved by the public when it was essentially bankrupt and on its knees begging for our help. And yet now, a £45 billion bail-out and untold economic misery later, and the bank is purposefully abandoning those very same communities that saved it in its hour of need.

Worse still, the accusations of number fiddling suggest that the bank knows exactly what it is doing, riding roughshod over their concerns and ignoring its obligation to repay the public bailout – morally, as well as financially.

Instead, RBS conducts meaningless tick-box exercises that do nothing to genuinely assess the need of these communities, or the true impact that closures are having on them. One shareholder have a heart-wrenching story of the decline of her town near Coventry, as five RBS and NatWest branches had closed in the surrounding areas over the last few years.

In response to our questions on these issues, the board of RBS was again unmoved and unconcerned. Despite predicting and answering their arguments in our question, the CEO Ross McEwan repeated the ‘party line’ that branch usage is in decline and that they can’t afford to be kept on.

Going even further, he accused Move Your Money of wanting to “run the bank into the ground” and to “impoverish shareholders” by keeping all current branches open. The fact that the public, who is the majority shareholder, has already been impoverished by RBS bank, and might be so again if the Government gets its way, did not seem to cross Ross McEwan’s mind.

Worse still, it’s a straw man argument. Move Your Money does not advocate keeping open all branches – it is patently absurd that there are rich areas that have multiple bank branches within a stones throw of each other, whilst communities that are dependent on only one bank branch are losing theirs.

As we described in our original question, the problem is the way that the bank decides which branches to keep, and which ones to ditch. These decisions should be made based on the public interest, not on private profit – especially as we saved the bank. We own RBS, so it should work for us.

Having gone through this rigmarole barely a year before, it all feels painfully familiar. With regulation being rolled back and debt bubbles blooming all around, Gogarburn’s bulbous balustrades might not memorialise the mistakes of the past, but rather portend more pain that’s yet to come.

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Fion Traves-Smith