RBS’s new boss banks goodwill in a crisis
It’s said that every great institution is the lengthened shadow of a single man. For ten years RBS bosses laboured under the spectre of Fred ‘the Shred’ Goodwin, whose decisions put the bank at the centre of the financial crisis and needing a huge injection of cash from UK taxpayers to stay afloat.
RBS’s new boss and the first woman to lead one of the big four UK banks, Alison Rose, this week showed how the bank could step out of the shadow of her predecessor’s legacy. With peculiar symmetry she is using the latest crisis to engulf the world – coronavirus – to show the value of her business to society.
On Tuesday, RBS was the first bank to confirm it would defer mortgage and loan payments for up to three months for borrowers hit by the coronavirus outbreak. This follows a broadcast interview last week on the bank’s proactive work to contact 5,000 businesses offering practical support to keep their businesses alive. At a time when many leaders will look for reasons to avoid speaking on such a fast-moving issue, Rose offers calm control even with incomplete information. Perhaps the perfect bank manager in these uncertain times.
That she feels confident enough to step into the issue suggests Rose has rediscovered a very clear sense of purpose and utility for retail banks in society. This is even more remarkable because during the financial crisis, even the regulator described parts of the sector as “socially useless”. It wasn’t clear what banks were for – beyond making bankers filthy rich – and RBS was arguably the most reviled of all.
Rose isn’t the first to tackle this problem. Antony Jenkins’ efforts to change Barclays’ culture and values was short lived and he was junked in 2015 three years into his tenure. His successor Jes Staley has since tried to out a whistle-blower and faced questions over links to sex offender Jeffrey Epstein, underlining that even CEOs need to build broad support if their legacy is to outlive them.
But Rose seems to have a relatively simple strategy, which is to earn renewed trust and confidence by understanding her critical stakeholders’ problems and making them her own.
This can be especially effective during a time of crisis. Coronavirus has hit leaders and corporate affairs teams with roiled markets, uncertainty and a need to step up business continuity plans. Instead of turning inwards to manage competing demands on her business Rose has – publicly at least – put the needs of her most critical stakeholders first. This must be terrifically challenging for a UK taxpayer-owned bank trying to see off new competition for its retail and small business customers. It is therefore, a plan that others could ape.
RBS is not yet completely fixed but Rose has banked goodwill for RBS during this crisis. The question is whether her approach will translate for the bank – and her successors – into long-term future dividends.