With the Royal Bank of Scotland (RBS) appointing Ross McEwan as chief executive last month (following the appointment of another retail banker in Antony Jenkins as CEO of Barclays last year), we find ourselves – probably for the first time in the history of UK banking – in a unique position: two major British banks are now helmed by retail bankers.
The similarities do not end there: both gentlemen replaced investment bankers (Stephen Hester at RBS and Bob Diamond at Barclays) who failed to endear themselves to regulators, thanks to a number of controversies and scandals, most notably LIBOR rate fixing. Interestingly, both appointments come with modest compensation packages and there have been brave statements made by the new appointees about culture change and purging the short-term, deal-orientated investment banking attitude and replacing it with transparent, customer-orientated banking—aspiring to a sensible, even old-fashioned approach.
This new-found affection for retail bankers is clearly not a coincidence; at least one hopes not. The key question that comes to mind is whether this trend represents a short-term response of the banks and the regulators to regain some credibility with the taxpayers and the media after the ‘rogue era’ of investment banking. Or is it a reflection of a more lasting strategy shift towards a ‘back to basics’, simplified style of retail banking.
Or might the ascendancy of retail banking executives be a forerunner to the implementation of the Vickers report, which recommends separation of Investment and retail banking activities?
Time will tell, but retail bankers can (at least for now) feel heartened by the fact that they are finally being noticed!