A TALE of two banks is fast emerging. While Lloyds is being readied for a return to the private sector five years after it came close to collapse, Royal Bank of Scotland appears caught in the headlights.
Shares in the largely state-owned lender have come under intense pressure since news of chief executive Stephen Hester’s departure emerged earlier this month.
Compounding the investor concerns over a power vacuum at the top is the lack of clarity over the future direction of the bank, and whether it faces being broken up.
Friday saw RBS top the FTSE 100 fallers’ board, with a slide of more than 7 per cent. Since Hester was ousted, some £4.5 billion has been wiped off the taxpayer’s stake in the bank. At just below 282p, the shares are well short of the 442p sale price that the bank regards as break even.
RBS faces an outstanding capital shortfall of more than £3bn but has made assurances to the City regulator that it can plug that gap without tapping shareholders for cash.
The clear cause of the investor unrest lies at the feet of a dithering government intent on bashing its own asset. In his Mansion House address, Chancellor George Osborne said the Treasury would conduct an “urgent” review of a recommendation by the Parliamentary Commission on Banking Standards that RBS be split into so-called good and bad banks.
The proposal is not a new one and the likely conclusion, analysts say, is that a break-up would not lead to an upturn in lending. It’s difficult to see what can be gained from any investigation and the longer it drags on, the greater the pressure on RBS’s stock.
Prospective CEOs must look askance at recent developments. They will have seen Hester do a praiseworthy job of restructuring the bank – shedding nearly £1 trillion of non-core assets, while restoring confidence in the City – only to be shown the door before the job was completed.
The top post at RBS may have become a poisoned chalice.
Lowdown on the high street
JUST how healthy is the British high street? Last week’s official snapshot would suggest that all is rosy. The rebound in sales volumes in May may have been driven by supermarket offers on food, but there were encouraging signs elsewhere, particularly among clothing retailers.
Analysts have suggested that the weather played its part, or the timing of Easter caused distortions. Certainly, reading too much into one month’s numbers is unwise.
Many of the nation’s shopping thoroughfares continue to resemble a mouthful of rotten teeth due to their gap sites.
Even Mary “Queen of Shops” Portas has failed to work her magic after it emerged that ten of the 12 towns taking part in a scheme backed by the retail guru had seen an increase in the number of empty shops.
It is churlish to single out Portas for criticism. One person was never going to solve the retail sector’s many ills. While the pilot schemes have been backed by central government funding, critics say the cash has been used inefficiently.
In defence, Portas stresses that there can be “no quick fixes”. Her plans to reinvigorate down-at-heel high streets by bringing in a mix of shops, cafes, pubs, restaurants and residential property are laudable. Many towns that have diversified – or curbed the onslaught of the big supermarkets – are flourishing.
One of the most telling numbers in the latest official statistics release was the 10.3 per cent jump in online sales – five times the rate for bricks-and-mortar takings.
The way in which people buy things is going through seismic change and the humble old high street is struggling to keep up.
Beer makers with bottle
THE BrewDog boys know how to make an entrance. Co-founders Martin Dickie and James Watt drove a tank through the streets of London last week to publicise their latest fund-raising efforts.
Round three of the North-east brewer’s “Equity for Punks” scheme aims to raise £4 million as the maker of such delights as Tactical Nuclear Penguin and Sink the Bismark looks to open more bars and bottle shops.
BrewDog, which has brought in ex-Allied Domecq boss Philip Bowman as an adviser, must start to look rather appealing to some of its bigger peers.