Oct. 02--Taking charge of the Royal Bank of Scotland is one of the least attractive jobs in finance as Stephen Hester found to his cost.
The new incumbent, New Zealander Ross McEwan, makes it clear he wants to take the Edinburgh-based bank in a different direction, that addresses the mistakes and omissions of his predecessors.
Fred Goodwin, who took the bank to the brink of bankruptcy in 2008, was obsessed with size and the accoutrements of power, from kitchens that could prepare scallops, to an office the size of local football team Hearts' stadium.
Hester, who succeeded Goodwin, was always at his heart an investment banker. At first he thought he could trade RBS out of difficulty. Later he would use his skills to shrink the bank's balance sheet.
As a result of Hester's efforts it does now look as if RBS will be able to return to the public markets before too long. The shape of the returning bank will partly depend on the independent review by NM Rothschild as to the wisdom of splitting the enterprise into a 'good' and 'bad' bank. Unless Rothschild has come up with something truly horrible, it will be in the best interests of the public if the uncertainty is lifted and some of the taxpayers' 80pc plus share stake is returned to the stock market.
McEwan plainly knows what kind of institution he wants. He is looking to simplify processes so that RBS becomes a bank that is easier for customers to do business with.
He also recognises that RBS, as one of the biggest presences on the High Street, has a duty to support future recovery.
One of the reasons for the anaemic shape of the British upturn, until the last three quarters, has been the difficulty smaller businesses have had in accessing the right kind of credit.
McEwan acknowledges this basic fact, and that should endear him to the Treasury and the Bank of England. He should not underestimate the task ahead. As Hester found to his grief in 2012, the bank's IT systems are not really fit for purpose. Moreover, there has been a confused culture at the top of the bank and a lack of steadying influences.
McEwan's sober approach contrasts with the rather contrived efforts of Antony Jenkins at Barclays to instil a mantra of respect, integrity, service, excellence and stewardship at his bank.
Jenkins, to his credit, diluted the rich cocktail of activities at Barclays pulling out of tricky areas such as tax planning. However, when it came to meeting capital rules it felt it could skip around the regulators, until the Bank of England rightly applied pressure.
The elite executives running Britain's banks face much more testing times ahead. Those who systematically seek to avoid capital and liquidity rules laid down by regulators could pay with their jobs.
Even more telling, the Treasury has now tabled amendments in the House of Lords that will make 'reckless banking' a criminal offence.
The only pity is that the legislation is not retrospective otherwise there would be a generation of bad bankers including figures like Goodwin and ex-HBOS boss Andy Hornby, now of Coral facing some long sleepless nights.
IT is quite an unnerving experience opening up the New York Times website to read the latest on the US government shutdown to be greeted by banner declaring 'The End of Britain' and an invitation to click on. Those who do so are greeted with 18-pages of invective from the magazine MoneyWeek suggesting that the slump that we have been through is only the first stage of the 'recession, joblessness and instability' that lie ahead.
The UK-based magazine claims 'we will see the consequences of this deep-rooted problem unfold in the cities, towns and villages of Britain. No one will escape the fallout'. The language is apocalyptic and enough to prevent anyone ever visiting Britain let alone doing business here again.
What makes it worse is that this campaign, presumably designed to scare people into taking out a subscription to protect their wealth, takes place against a background of real crisis in the world.
As World Bank President Jim Yong Kim noted in a speech at George Washington University yesterday, the war in Syria has been 'horrific', killing 100,000, displacing another four million and creating a refugee problem of two million people.
In large parts of the world one billion people still live in extreme poverty. MoneyWeek has its tanks on the wrong lawn.
FIVE years ago today the 'Great Panic' spread to America's corporate sector with General Electric, which has a large financial arm. It sought $15bn of new capital from existing shareholders, already having tapped the Federal Reserve for short-term cash.
Once again it was Warren Buffett to the rescue subscribing to $3bn of the shares and putting in a further $3bn in the shape of warrants.