‘We sometimes feel as if commentators variously want us to go back to over-lending, to operate on a not-for-profit basis, never to entertain a client and to offer employment conditions that deter the best and brightest,’ he said. ‘Oh yes, and at the same time to pull off a recovery enabling taxpayers
to recoup the support given.’
Such is the lot of the modern bank boss, but, being parachuted into the middle of the gravest financial crisis in generations, Hester was never going to land on a bed of roses.
RBS is in an unusual position, and so is its marketing department. The bank has to act along commercial lines while being careful not to abuse its position as a mostly publicly owned entity.
Targeting the customers of Barclays and HSBC, which have not received direct taxpayer support, and exhorting them to move their savings to the security of government-backed RBS, is definitely not on the agenda.
This schizophrenic existence is causing chronic uncertainty, and not only in the City. Last week, as the RBS share price rose for the first time above the average price at which the government bought in during last autumn’s £20bn rescue, it was tempting to celebrate the prospect (admittedly still a long way off) that taxpayers will eventually get their money back.
Pessimists took the opposing view: they are increasingly fearful that the European Commission will rule that the state aid package enjoyed by RBS requires remedies far beyond those proposed by the bank itself.
In UK retail banking, it is Lloyds Banking Group that is likely to come off worst from the deliberations of Brussels-based bureaucrats: significant chunks of the Halifax or Lloyds TSB networks are likely to have to be sold off to satisfy competition concerns.
For RBS, the most obvious problem is its large market share in the SME sector. Hester has already acknowledged as much, but that is a price he will consider worth paying given that the bank would not have survived at all without government support last year.
There may also be mileage for RBS in reducing the exposure of the parent group’s brand, if it is to rebuild its image. Sources close to RBS have told me that it is considering rebadging its sponsorship of the Six Nations under the NatWest brand.
The lofty ambitions for a global banking empire assembled under former chief executive Sir Fred Goodwin are now a distant memory.
Last week, RBS announced the sale of parts of its Asian operations. It will also be losing an international brand platform when it drops its sponsorship of Formula One motor racing.
Promoting the NatWest brand more aggressively might also provide a useful weapon in the battle against some of the bank’s emerging competitors.
Tesco and Virgin Money are two potentially powerful entrants to retail banking, with stated aspirations to build substantial franchises.
The mistrust that engulfed high-street banks during the credit crunch has been mitigated by the inertia that shapes consumer behaviour.
A reshaping of the retail financial services landscape of sorts will come, though, and it will prove highly challenging for the banking establishment.
For the time being, taxpayers must hope that the marketing chiefs of the state-backed banks are on their mettle.
Mark Kleinman is the former City editor of the Sunday Telegraph. He will be joining Sky News as City editor, and The Times as a columnist, next month.
30 seconds on Virgin Money
- Sir Richard Branson launched financial services brand Virgin Direct in partnership with Norwich Union in March 1995.
- Virgin Direct shook up the industry by offering the cheapest PEP on the market, helping to drive the popularity of index tracking.
- In June 2000 Virgin rolled out virginmoney.com, a price-comparison website for financial products.
- Virgin Direct added more products to its portfolio, including life insurance, mortgages, pensions and the Virgin Credit Card.
- In 2002 the two brands were merged to create Virgin Money.
- In 2008 Virgin was the favoured bidder for the ailing Northern Rock. If the deal had gone ahead, the business would have been renamed Virgin Bank.
- In March, Branson told the The Times that he still has plans for Virgin to become a high-street bank.
- Virgin Money will take over from Flora as title sponsor of the London Marathon from next year.