Shareholders at today’s annual general meeting (AGM) in Edinburgh have lashed out at executives over branch closures and its treatment of small business customers.

RBS chairman Sir Howard Davies told shareholders that use of branches had fallen sharply as customers shifted to digital banking.

He backed chief executive Ross McEwan, who said directors realised closures were difficult for customers, colleagues and communities.

The Royal Bank of Scotland board has stuck by its decision to shut 62 branches across Scotland at today's AGM. Picture: PA WIre

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RBS announced in December that it was closing 62 branches across Scotland.

Ten of them were later given a stay of execution until at least the end of this year, pending a review.

Sir Davies blamed the latest round of closures on its competition responsibilities linked to its £45 billion Government bailout during the financial crisis, having scrapped plans to sell off its Williams & Glyn network.

RBS finance chief Ewen Stevenson has resigned just hours before the AGM. Picture: Getty

Instead, RBS is being forced to encourage SME customers to switch to other lenders in hopes of increasing competition.

“It would be difficult for customers to transfer or get them to transfer if their branches were still open,” the chairman said.

Mr McEwan said he was “well aware of the issues” for communities and vulnerable customers, but said the take-up of digital banking had been “much more dramatic than I would have expected”.

“I’m convinced that if we as a bank don’t respond or put in place other alternative actions ... this bank will continue to have difficulties,” he said.

The stance did not stop protesters from the Unite union from gathering outside the AGM in Edinburgh. Regional officer Lyn Turner batted away suggestions that changing banking behaviour was the cause of so many closures.

“This is purely about profit,” she said. “They are turning their backs on local communities and local businesses.”

The bank’s departing finance chief Ewen Stevenson said market turmoil could mean a delay to the Government’s share sale.

Shareholders also vented anger over the company’s mistreatment of small business at the hand of its now defunct turnaround unit, Global Restructuring Group (GRG), having been accused of pushing firms towards failure in the hopes of picking up assets on the cheap.

Gavin Palmer, who said he “only bought shares in RBS to sort you out and your bad practices”, also pushed Mr McEwan on his apology over GRG, asking whether it would have been made if MPs on the Treasury Select Committee had not pushed so hard for the full report’s release.

Mr Davies insisted the bank did apologise for “parts of the bad treatment”, which were identified in the report, but admitted the report “did tell us things we did not know”.

“Did you not listen to what people were saying at previous AGMs?” Mr Palmer asked.

“Did you not see (former chief executive) Mr (Stephen) Hester go bright red with shame as soon as GRG was mentioned?

“Did you not notice all the shareholders...complaining about the bad treatment in small business, medium, large, listed PLC’s as well?”

Sir Davies replied that the board carried out its own review into the controversial division.

There is also speculation that the Government could very soon sell off as much as 10 per cent of its 70.5 per cent stake in RBS, having last year confirmed plans to offload £15 billion worth of shares by 2023.

However, Mr Stevenson said the recent slump in European stocks - sparked in part by jitters over the rise of Eurosceptic parties in Italy - might be a cause for pause.

“Obviously, when you look at what’s been happening in the markets in the last few days with Spain and Italy and a significant sell-off in bank stocks, I would be surprised if now is an optimum time to sell stocks,” he told reporters on the sidelines of the AGM in Edinburgh.

The Government is already facing a near-£26.2bn loss on its holding, with the lender’s shares languishing well below the average 502p share price paid during the crisis era bailout, at around 276p.

The bank unexpectedly issued a market update today to announce Mr Stevenson’s resignation just hours before the AGM, saying he was set to “take up an opportunity elsewhere”.

Mr Stevenson said that it was the right time to move on to a new role.

“You’ve seen what we’ve done over the last four to five years - it’s a very natural inflection point given the amount of stuff we’ve now cleaned up at the bank, so it’s a very natural point to go off and do something else,” he told reporters.

“I mean the bank’s back in great shape, ready to be privatised, so I know people are always surprised by the news, but they really shouldn’t be surprised by the trigger points that create the news.”

Mr McEwan batted away questions over whether his own departure was imminent given the bank’s progress over his five years at the helm.

“We’re not finished yet, let me quite clearly say that,” the chief executive said.

Defiant RBS to press ahead with Scottish branch closures