RBS chief warns of slow and difficult recovery

THE boss of bailed-out Royal Bank of Scotland last night said it was “time to move on ” from the mistakes of the past and look towards growth and recovery.

Speaking at the CBI Merseyside annual dinner at Aintree Racecourse, Mr Hester, who is charged with reviving the fortunes of RBS – which is more than 80% owned by taxpayers after it received £45bn in bail-outs – said the private sector had to pick up the slack and drive the growth of the economy.

He said the road to recovery for countries like Britain – which over indulged in the credit bubble before the financial crisis – would be in “slow and difficult” and we would all continue to suffer a hangover after the binge.

“I am inherently optimistic that we are moving in the right direction in the world economy and in the UK though, he told 300 leading business people at the event.

While acknowledging that bankers and banks had behaved recklessly in the run up to near the collapse of the financial sector in 2007-8, he said everyone who had over-borrowed on loans or credit cards bore a responsibility too.

Mr Hester will meet staff at RBS in Liverpool this morning and take part in a question and answer session with them. RBS is a major private sector employer in the North West with around 10,000 staff.

He said he had three goals for Royal Bank of Scotland to meet so that the Government could sell its stake in the business for a profit.

These are: serving customers better than before;creating a strong and stable RBS and finally a successful commercial business which investors will want to buy in to so UK taxpayers will be repaid and at a profit.

“It will take a few years to turn the super-tanker around”, he said.

While not shying away from acknowledging that mistakes had been made, he said banks and RBS in particular have a role to play in the recovery and are not all “evil.”

“We are part of the solution, not just part of the problem. We’re a facilitator for the rest of the economy, and we exist only if we do a good job.”

He pointed out that RBS handles 40p in every pound in the economy and  performs key roles for major companies such as Shop Direct in the North West, and that the “political caricature” of everyone in financial services being a “casino banker” recklessly gambling, or ripping off consumers was “completely false”.

Alan White, chairman of the CBI in the North West, agreed that private businesses needed to step up to the plate to drive growth. He said everyone appreciated the recent budget would contain “bad news”, it was necessary to tackle the deficit.

Turning to what remains a hot topic in the North West – the new Government’s intention to scrap the North West Development Agency – Mr White said the CBI – although in favour of maintaining the RDAs – would “fight hard” to win funding and recognition for the North West, when the new Local Enterprise Partnerships are introduced.