RBS boss admits banks became 'detached from society'

Stephen Hester Mr Hester wants banks to return to putting their customers first

Banks became "detached from society" and still need to reconnect with their customers, the chief executive of Royal Bank of Scotland (RBS) has admitted.

In an interview with the BBC's Today programme, Stephen Hester said the industry was "coming down to earth with a bump" following recent scandals.

He added that the UK could not afford "blasting it to smithereens" because of the vital role banks played.

However, he also said further problems at the banks may be discovered.

Mr Hester was speaking after RBS reported a half-year loss of £1.5bn.

The bank also confirmed on Friday that it would put aside £125m to pay compensation to customers affected by the recent breakdown in its computer systems.

Account holders at RBS and its NatWest and Ulster Bank subsidiaries faced disruption for up to two weeks in June after a software upgrade at the bank.

'Vital industry'

RBS has been caught up in three recent scandals affecting the banking sector.

Start Quote

A successful business must be built off the back of serving customers well, and until we as an industry can say we are doing that, we won't have finished the changes we need to make”

End Quote Stephen Hester RBS chief executive

Firstly, it is being investigated over the Libor interest rate-fixing scandal that saw fellow bank Barclays fined £290m in June.

Mr Hester told the BBC that as RBS was "still being investigated" it did not yet know what fines or settlements it may face.

RBS has already sacked a number of staff connected to the matter.

Separately, RBS is having to pay compensation for two mis-selling scandals: mis-selling payment protection insurance, and mis-selling specialist insurance called interest rate swaps to small businesses.

Mr Hester said: "We can't afford the luxury of giving up on the banking industry, of blasting it to smithereens, as much as that might be enjoyable, or get out our frustrations.

"This is an industry that the world needs, that the country needs, it needs it to oil, if you like, the economic wheels, and we need it because it employs in its own right millions of people, and pays huge amounts of taxes and so on."

Regarding the possibility of banks discovering additional problems, he said: "of course there is still a risk that you turn over rocks and find new things [that you have to clean up]".

Mr Hester added that while the banks had now largely fixed all their structural faults, they still had to return to putting customers first.

"It is very clear to me," he said. "A successful business must be built off the back of serving customers well, and until we as an industry can say we are doing that, we won't have finished the changes we need to make."

Mr Hester was appointed RBS chief executive in 2008, with the job of turning it around after the government bailed it out with billions of pounds of taxpayers' money.

The government currently owns an 82% stake in the bank.


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  • rate this

    Comment number 23.

    "...Banks became "detached from society" and still need to reconnect with their customers..."


    Not all of them, Stephen.

    The Co-op's owned by a large part of it, for instance, as are the fair few mutuals.

  • rate this

    Comment number 22.

    most banks are interested in stocks and bond and other investments they could care less about retail backing suck car loan,savings,current accounts because there is very little money in it. car loans and business loan are to high risk now a days. even if do try to get loan the requirements are to strict.

  • rate this

    Comment number 21.

    What banks need is a return to the days of Captain Mainwaring, the respected local bank manager.

    But bank bosses would rather offshore it all to India so they can make even more money.

    And every time I visit my bank I get the real impression that they view their customers as little more than an inconvenience, something that they have to tolerate.

  • rate this

    Comment number 20.

    RBS should be nationalised. No bonuses should be paid. When profitable, parts should be sold off. No bonuses, and no free shares to the people who just happen to be there and let it fail

  • rate this

    Comment number 19.

    The bank recently raised my wife's interest rate on a credit card with no warning. She visited them to ask why and to keep her old rate. Instead they offered her a £10,000 loan and refused to change her card rate - out of touch with what we even asked for... we did ask if the higher interest was just to pay we taxpayers who own the bank back quickly though

  • rate this

    Comment number 18.

    You don't say!!!.
    Closed all my bank accounts over 25 years ago. I came to the conclusion they were all immoral thieving "legal" gangsters.
    While they last, stick with old fashioned building societies.

  • rate this

    Comment number 17.

    They are detached from society because the rule of law is not being applied to their activities.......

    Governments are hell bent on protecting their activities and are ignoring the 99% ....

    We will never get our money back from the complete and utter failure that our major banks represent .

    Banking should be a service to society not the other way around.....

  • rate this

    Comment number 16.

    Banks lost touch in the 1980's when they stopped being trusted advisors and started being spivvy salesmen. It has taken a long time for the public to realise they have been taken for mugs. But no government will ever tackle this properly because the politicians are in the financier's pockets. Expect a few sticking plasters as the proposed cure for this cancer.

  • rate this

    Comment number 15.

    I so wanted to post a comment on this article as follows: At last, a Bank CE has admitted what many of us already knew “that the banks were detached from society and that we (the society) have brought them back to earth. Need we say or state more? Hope others still in the state of denial "get it" as well.

  • rate this

    Comment number 14.

    This all back dates to the idology of do whatever it takes to make a quick, easy buck. Never mind whether it is in the customer's best interests or not, what matters is whether or not the bank makes money and whether it helps the bank official meet a target!

  • rate this

    Comment number 13.

    Banks didn't because detached from society, nor did bank staff; it's the executives, high level managers, fund managers, accounts managers and sales people who get in a bonus what the rest of get in two years' wages and who expense as much as they can. They have no idea of the value of money which, considering their jobs, is a bit of an issue.
    Pay a fair wage to all staff and a fair bonus to ALL

  • rate this

    Comment number 12.

    Nice work opening a HYS on this one BBC. I think people are finding it awkward to slag off bankers on the olympics ones so give them the fix they need.

  • rate this

    Comment number 11.

    It's only state owned banks that lose money, our money that is. Simply because huge salaries and bonuses still have to be paid, whether it's private or public. That's the way it'll always be, as long as nobody has the guts to do anything about it.

  • Comment number 10.

    All this user's posts have been removed.Why?

  • rate this

    Comment number 9.

    He says this yet hell carry on with the gold bonus and rubbing us up the wrong way thinking his money will protect him from the country he is robbing, much like the ministers really, I mean who frauds expenses and then goes and parties on public money? Grrr these people take us for a joke.

  • rate this

    Comment number 8.

    Also detached from society : George Gideon Osborne.

    Who should resign.

  • rate this

    Comment number 7.

    The public are hypocrites. We gladly make use of free current accounts then whine when *our* choices lead to us paying charges. If you hate banks so much, just stop using them. Nobody is forcing you to be a customer.

  • rate this

    Comment number 6.

    Hester said "It is very clear to me," he said "A successful business must be built off the back of serving customers well"

    the headline should read 'detatched from reality' I think

  • Comment number 5.

    All this user's posts have been removed.Why?

  • rate this

    Comment number 4.

    Deeds not words mate, deeds not words.


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