The "reputational damage" suffered by Royal Bank of Scotland (RBS) and its Ulster Bank subsidiary in the wake of the financial crash was "self inflicted", a senior RBS executive has admitted.
Penny Hughes, who chairs the bank's internal sustainability committee, said the lender had lost sight of its purpose in the run-up to 2008, buying into a culture of "growth for the sake of growth" and prioritising short-term profit above its customers.
Her unusually frank admission came at a conference on trust, reputation and culture in Dublin today, which was hosted by Business in the Community in Ireland.
RBS remains 81 per cent owned by UK taxpayers after receiving a £46 billion bailout in 2008 and 2009; some £15 billion of which was used to cover loan losses at Ulster Bank.
Her committee was established in 2010 to restore the bank’s reputation following criticism of its lending practices and remuneration structures.
Ms Hughes said Ulster Bank had enjoyed a strong reputation in Ireland prior to the crash on account of its charitable programmes and its support for schools and community organisations.
“However, many years of good corporate citizenship gave RBS and Ulster Bank little or no protection against reputational damage suffered in the aftermath of the financial crisis.”
“RBS encountered a range of self-inflicted problems, both in terms of culture and conduct, and balance sheet.”
She said the bank became “something of a lightning rod” for public resentment towards the banking sector in the UK, chiefly because of the level of state support that was required to keep it afloat.
Since that time, the bank had radically altered the culture of its business; changing its code of values, its remuneration structures and its products, “on the latter we have committed to ending all teaser rates and simplifying all terms and conditions” , she said.
Ms Hughes said the banking sector in general had paid a high price in terms of reputation for the mis-spelling of various financial products, including payment protection insurance.
Also speaking at the conference was Edel Clancy from food wholesaler Musgrave, which owns the Supervalu and Centra chains.
The group was one of the few to avoid reputational damage arising from last year’s horse meat scandal because none of its products were contaminated.
Ms Clancy said the company’s strict policy of only sourcing local beef, which is traceable to individual animals, saved it from exposure to the crisis.
“All of our own-brand beef comes from local suppliers in Ireland; we have relationships with these suppliers and the supply chain is very short.”
Its chief market rivals Tesco, Aldi and Lidl were found to be selling products with traces of horse meat and suffered reputationally as a result.
She said the key lesson of the meat crisis was that no matter how vibrant or well-established the country’s food sector is, it can be founder if the trust is broken.
