Fresh blow for RBS boss Stephen Hester as branch sell-off fails

| October 13, 2012 | 0 Comments

By
Ruth Sunderland

16:04 EST, 12 October 2012


|

08:11 EST, 13 October 2012

Stephen Hester, the chief executive of Royal Bank of Scotland, promised there would be ‘no disruption’ for customers as plans to sell 316 branches to Santander collapsed in a disastrous development for the bank.

Mr Hester said: ‘I can assure all affected customers that there will be no disruption to the service they receive. It is business as usual in all of these branches, and customers don’t need to take any action.’

The planned sale has been in the pipeline for more than two years and has been subject to long delays.

Collapsed: The Santander transaction was a key plank of Hester's recovery plan

Collapsed: The Santander transaction was a key plank of Hester’s recovery plan

A
disposal of the branches is a requirement of the
European Commission as one of the conditions for the bank receiving a
£45billion bailout from the Government.

But the Spanish bank said the sale, originally scheduled to be completed in 2011 but extended to the end of 2012, would ‘not be achieved’ in this time.

Santander UK chief executive Ana Botin said: ‘Our guiding principle throughout this transaction has been a seamless journey for customers – which requires the business to be delivered to Santander UK by RBS in a steady state.

‘We have concluded that given delays it is not possible to complete this within a reasonable timeframe.’

RBS must offload the branches by the end of 2012, but Hester may now struggle to find alternative purchasers in the
current climate.

‘It is of course disappointing that
Santander decided to pull out of this transaction, especially for the
customers and staff involved,’ said Hester. ‘However, RBS’s strong progress in our
restructuring plans means we can continue to provide a stable home for
this business and its customers pending a further resolution.

‘While this is a profitable part of
our business that we would rather not part with, RBS has worked hard to
ensure it is substantially separate from our UK branch network and
corporate business and largely ready to be taken on by a new owner.

‘Much of the heavy lifting associated
with a transfer has already been completed, including separating data
for 1.8million customers and putting in place a stand-alone management
team.

The embattled bank supremo recently
told an investor conference that RBS is ‘well on the way to being a good
bank’. He claimed it is set to exit the Government’s asset protection
scheme that insures its billions of pounds of tainted loans.

The Santander transaction was a key plank of his recovery plan.
At the time it was announced in the summer of 2010, Hester said it was ‘an important milestone in our restructuring work’.

The sell-off was initially thought likely to raise £1.65billion for RBS.
The deal would have involved around 1.8million customers having their accounts moved to Santander.

It emerged last night that Santander, whose UK operation is entirely
ring-fenced from its Madrid-based parent, pulled the plug. This is the
second disappointment in a week for Hester as the bank sold off the
first tranche of shares in the float of insurer Direct Line, raising
£800million.

City analysts questioned whether the stock market listing raised a good
price for taxpayers, who still hold an 82 per cent stake in the bank.
The float valued the whole of Direct Line at just £2.6billion, around
half the amount Hester initially had in his sights.

Hester, who has received no bonus for
two years, has already been hit by the computer meltdown at NatWest
that affected millions of customer accounts earlier this year.
He is braced for a large fine over its involvement in the Libor
rate-fixing scandal, following the £290million penalty meted on rival
Barclays.

The bank made a £1.5billion loss in
the first half of this year and set aside £310million to cover its
computer meltdown, interest rate swaps and PPI loan insurance
mis-selling.

It has also admitted it is facing another large penalty from the US
authorities for violating trade sanctions with Iran and other rogue
regimes.

The deal with Santander was
previously expected to have been done by the end of last year but has
dragged on. One major stumbling block is that the two banks’ computer
systems do not mesh together.

There are also suggestions that the branches in question are no longer
performing well enough to meet Santander’s performance targets, which
may have led it to seek a lower price.

The comments below have not been moderated.

My accounts came to RBS through Williams and Glynn over 30 years ago. On being told Santander had bought my nranch I opened an account with the Co Op ( who I can recommend by the way) and transferred nearly all my money and DD’s etc. . I still have a small amount in RBS I hadnt the heart to be that disloyal to a bank that saw me through university, a first car and a mortgage on my house – all paid off now. I would have closed it when Santander finally took over. How many others are the same? Did Santander get wind of the fact a lot of those people they were “buying” had minds and feet and were using them? Good riddence to bad rubbish in Santander. Time to tell the EU to buzz off now.

lyndy
,

Plymouth,
13/10/2012 15:26

Never understood this forced sell off anyway. How can making this mostly tax payer owned bank smaller increase its profitability? The government surely needs to try and encourage the public to open accounts at RBS and borrow money rather than reducing the size of it portfolio. I am convinced it will soon be turning the corner and proving a good asset to the UK.

Meindevon
,

Exeter, United Kingdom,
13/10/2012 15:25

I was all set to transfer ALL my RBS accounts at two branches to Scotland as I am a POA on my mothers’ accounts at a Scottish branch and needed to be able to access them online. I have the form filled in and should have gone in last week to do that. As it happens, I was unable to go and just as well it would seem! How many other RBS customers of English branches have already transferred accounts to Scotland? What a costly mess, I hope Santander is going to cover the cost of all work already undertaken as RBS certainly can’t afford to write it all off.

Meindevon
,

Exeter, United Kingdom,
13/10/2012 15:05

“One major stumbling block is that the two banks¿ computer systems do not mesh together.”
I am sure there are customers who use the internet to move money between RBS and Santander in seconds.

“The sell-off was initially thought likely to raise £1.65billion for RBS. The deal would have involved around 1.8million customers having their accounts moved to Santander.”
Cash on Sale or staged payments?
Did not like the balance of savers/borrowers over the 1.8m for the price?

Clearly Santander did not view the average worth of each customer as £917 for the length of time they would continue to bank with Santander.
A net asset customer of 100k fixed for two years has an immediate worth of £2000 using santander’s savings rates 2010 (3.5%) compared to 2012 (2.5%).
I do not have the figures for a 100k mortgage to work out a short term net worth.
Now me, there are some things I want to buy, but I just do not have the cash.

Darren
,

Essex, United Kingdom,
13/10/2012 14:05

russ1669, london, 13/10/2012 2:23 IN BUSINESS???? with out grammar OR spelling!!!!!! tut tut.

Henry
,

Reality, United Kingdom,
13/10/2012 14:04

This was always a bad deal as it was supposed to be about creating more competition in UK high street banking. But the sale to Santander deal was flawed because Santander UK is already one of the big five so it was never going to achieve the supposed ‘goal’. Plus Santander has a terrible IT track record with merging UK acquisitions.
However the LTSB ‘verde’ sale to Co-op is different. It will create a bigger new high street challenger on a scale of the big five rather than making a big bank bigger. Plus the TSB brand being resurrected as part of the Co-op Banking Group will continue to operate on Lloyds back office IT systems, so for those ‘TSB’ customers there will be no change in sort codes etc. the only change will be the branding of branches, cards, cheques etc. the co-op is paying (leasing) capacity to use Lloyds IT so that’s income for lloyds. plus co-op have made it clear current co-op customers will be migrated onto the back office systems leased from Lloyds.

steve
,

Sheffield,
13/10/2012 13:38

Would be here if Mrs T did not get the retail and investment banks to merge? What happen to the likes of Abbey, Halifax which she changed the rules so they could become banks?

Dave
,

London, United Kingdom,
13/10/2012 13:02

keep well away from anything Santander touchers

micsey
,

wirral,
13/10/2012 12:48

I have often said that these sales of branches will result in the customer being forced to have a new a/c number and sort code but other Mail posters were somewhat sceptical of what I said. In another newpaper there is a post from someone who says that in the letters that Santander had already sent to RBS/Nat West customers they clearly stated that new a/c nos and sort codes were obligatory. I have three credits going in each month and 8 DDs + 4 standing oders. I tremble at the thought of what could/might go wrong! What earthly right does the EU have to persecute and punish the customers of UK banks by putting them through this turmoil and treating them as a commodity which can be bought and sold like a lb of sausages on a butchers marble slab. I know many happy customers of RBS Nat West so stick with them and tell the EU to keep their intrusive noses out of your personal business. e-mail your MP and say that these sales MUST be stopped or you will vote UKIP.

Roy
,

Billericay, United Kingdom,
13/10/2012 10:31

A few more thoughts:- I just wonder how many hundreds of £millions RBS has spent so far persuing this nonsense which resulted from the whim of ONE person;- Neelie Kroes the unelected EU Competition Commissioner. She wanted to punish UK banks and taxpayers for bailing out our own banks yet remains strangely silent about the banks in the eurozone which the UK taxpayer has also helped to save? Lloyds has employed up to 500 people for more than two years working on `project verde` — what an unforgiveable wate of time, effort and money. Not only should this money have gone to paying back the taxpayer but the best brains in both organisations have been diiverted from actual banking operations. Surely the time has come to stop all this stupidity and to tell the EU `on yer bike` and to leave Stephen Hester to make these, and all the other RBS/Nat West Branches profitable so that they can repay what they borrowed from us?

Roy
,

Billericay, United Kingdom,
13/10/2012 10:21

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