Ian McConnell: Centuries of Scottish heritage overlooked as independence debate swirls

The first was that the move had looked inevitable, given that the mood music and marketing campaigns emanating from Royal Bank for a number of years had seemed to indicate a preference for the NatWest brand.

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The second reason for not getting particularly excited on first hearing the name-change news was that, certainly from the outside, it appeared that the highest-level decision-making had shifted surely from Edinburgh to London over the last decade in any case.

In short, it has seemed for a long time now that this ancient banking institution is far less Scottish than it was.

That is not to understate the importance of the high-level operational jobs at Royal Bank’s site at Gogarburn on the outskirts of Edinburgh, or the significance of the institution to the Scottish economy.

It is just that, in practical terms, Royal Bank has not over the past decade looked that much like the truly Scottish-based operation which it had been for centuries.

And the ascension to chief executive of Alison Rose, who studied at Durham University and joined the NatWest graduate scheme in 1992, does not look likely to change anything on that front. Ms Rose succeeded New Zealander Ross McEwan.

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When Royal Bank acquired NatWest in early 2000, after launching a hostile bid for the London-based bank and prevailing in a protracted fight over the prey with first-mover Bank of Scotland, the venerable Edinburgh institution was very Scottish indeed.

The late Lord Younger, the former MP for Ayr who served as a minister under Margaret Thatcher and was nicknamed “Gentleman George”, was chairman of Royal Bank during the bid battle. Former Scottish Development Agency head Sir George Mathewson was chief executive. And Paisley-born Fred Goodwin was deputy chief executive. Scottish financial sector stalwart Benny Higgins held a senior executive role.

The City was fully behind the takeover of NatWest at the time.

However, even then, it seemed NatWest was being a bit unfairly maligned. The appetite for it to be taken over seemed to hinge largely on the view that NatWest was somehow flabby, and had not cut its costs enough.

This was an era in which there was a developing appetite in the City for lower capital ratios, coupled with a clamour for the likes of share buy-backs by banks to supposedly return value to investors. This demand continued up until the financial crisis. Capital ratios that had long been regarded as prudent were mocked as a sign of inefficiency. There was, obviously, a major reassessment of the situation after the crash.

From a shareholder-return perspective, the NatWest deal was a tremendous success for Royal Bank, with the integration of the two operations by the Scottish bank’s management team delivering what was promised.

The deal seemed for a while to disprove the long-held wisdom that you could not successfully pull off a hostile takeover in the banking sector. Conventional wisdom had tended to be that you needed to get right into the books of a bank over a lengthy period, working closely with the bid target, to form a full view and assess risk.

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Royal Bank’s leading involvement in a consortium bid for Dutch banking giant ABN Amro years later could, however, be viewed as having proved the old wisdom right, in terms of whether hostile banking takeovers can work.

Unfortunately for Royal Bank, this huge deal was concluded in October 2007, less than a year before the collapse of US investment banking giant Lehman Brothers in September 2008. The Lehman collapse got the global financial crisis under way in earnest. Signs of the developing crisis had, of course, been evident since the summer of 2007.

The rest, as they say, is history.

Royal Bank had to be bailed out to the tune of tens of billions of pounds by the UK Government in late 2008 and early 2009. More than a decade on, the UK Government retains a majority stake in the bank.

In autumn 2008, then Bank of Scotland owner HBOS had also found itself on the brink, and was rescued through a takeover by what was then Lloyds TSB, with the enlarged entity receiving massive UK Government support. The Government stake in what became Lloyds Banking Group was subsequently sold, returning this institution entirely to private ownership.

There is no doubt that Royal Bank’s near-collapse was dramatic, and that the after-effects have been huge.

Sadly, under the majority ownership of the Government, Royal Bank has retrenched back to the UK, selling off large overseas operations including interests in the US. It has thus found itself largely dependent on a UK economy that has been in relatively grim shape for more than a decade.

Royal Bank has cut costs dramatically and axed branches, and, as a survey published this week by the Competition and Markets Authority confirmed, it has a lowly position in customer-service ratings from consumers and businesses.

It is difficult to imagine that the cost-cutting and the customer-service issues are unrelated. It is also worth noting Royal Bank came bottom of the table for branch services in terms of how these were rated by current-account customers.

The Royal Bank of Scotland brand will, thankfully, remain on high streets north of the Border even after the parent company’s rebranding later this year. This is some comfort, given the planned disappearance of the Clydesdale Bank name from the high street following parent group CYBG’s takeover of Virgin Money. Under chief executive David Duffy, who came to Glasgow-based Clydesdale from Allied Irish Banks, the Virgin Money brand will prevail on the high street as well as having been chosen at parent-company level in the enlarged group.

However, what should we make of the planned change of parent-company name at Royal Bank?

Having reflected on this, and notwithstanding the southward shift of key decision-making within Royal Bank, the change of parent-company name to NatWest is a big deal.

When considering this matter, it is important to remember Royal Bank’s centuries in existence and not fall into the trap of taking a short-term view based on the last decade or so.

The bank was founded in 1727. Dispensing with Royal Bank as the parent-company name is obviously a sensitive issue, in the context of highly charged debates over independence and Brexit in Scotland. And so it should be. The current name of this institution, at group level, reflects its Scottish roots and centuries of heritage.

In this context, it would be interesting to know what senior UK Government ministers think of the change from a Scottish to an English name.

Royal Bank has clearly had a grim time of it for more than a decade. However, it has been around for hundreds of years, and over centuries there tend to be, to put it euphemistically, ups and downs.

It is a dismal situation that those who are calling the shots want to change the name of this institution from Royal Bank of Scotland.

Unfortunately, though, the decision is typical of the type of short-termism we see so often in the corporate and political worlds these days, from leaders who should reflect on history as they look to the future.