The Good bank/Bad bank campaigners were seen off in the Treasury decision on restructuring RBS. Those of us who wanted to see more than one competing UK clearing bank formed from the parts of RBS were also disappointed.
However, the new policy does include selling off Citizens, the US banking Group owned by RBS, and further reductions to the Investment Bank, whether by divestment or slimming down. These are both policies I have called for in the past.
The bad news still continues from RBS. The Bank reported more losses and still pays no dividends. It has published a report on its own small and medium sized business lending and service which is extremely critical.
The new Chief Executive sounded the right note, when he admitted past mistakes and promised full attention to creating a better quality more responsible UK clearing bank. He pledged himself and his team to being a better bank for UK business, and a more attentive and helpful bank towards its retail customers.
The Chancellor was able to welcome all this by saying there is now a new strategy. This new approach is designed to make RBS an asset rather than a burden for the UK economy. It is time RBS was available to make a full contribution to UK economic recovery.
RBS has got its portfolio of bad loans down to a mere £38bn, a relatively small sum for a bank of its size. The plan is to sell more of these on from within the ring fenced bad bank RBS will itself continue to own.
I wish the new management well. Splitting up RBS more fundamentally would have been a good idea 5 years ago or even 3 years ago. Now we need what is left to work better for UK economic recovery. We also need to speed the day when RBS can make profits and pay dividends, to get some of the taxpayers’ money back. Labour made a very bad investment. They should have broken up RBS at the time of its collapse, and only supported with loans those bits essential to the UK’s money transmission and deposit system. Now we have to move on, and manage the inherited mistakes as well as possible.