UK reforms to cost taxpayers up to £20bn
THE UK’S banking reforms will cost the taxpayer £10-20bn in lost value on RBS’s shares, the bank’s chief executive Stephen Hester told a roomful of business students yesterday.
He said that despite beating its recovery targets by slashing its balance sheet quickly, the bank had been hit by an extra avalanche of regulation, in large part due to the British government.
“The UK regulatory reforms on their own have probably cost £10-20bn from our future market value,” he said, raising the question of whether taxpayers will ever see the return of their £45bn bailout.
Hester has been a vocal critic of the government’s banking reforms, drawn up by the Vickers Commission, which will force RBS to “ringfence” its retail arm from the rest of its businesses.
Hester also fired a shot at the relentlessly negative “commentariat” for undermining morale and causing “shock and disillusion” at the bank.
“No company has had a greater kicking or is subject to greater hostility from the commentariat,” he said. “Our people have to face those pressures, as they have also had to face loss of personal savings, loss of pride and confidence, and the loss of over 35,000 jobs. It is uncomfortable to work at RBS.”
He also alluded to the political pressures that ownership creates on the bank: “Government… ownership can cause political controversy of itself, and create pressures that hinder the progress of the subject company,” he said. He has previously told City A.M. that political meddling has forced him to compromise on how he runs the company.
But he tried to sound a note of optimism by rebranding the bank “the new RBS that will drive us into the future” and said it is on track in his five-year recovery plan, which should be completed in two years.