Britainâ€™s largest casualty of the international turmoil in the banking sector has been the Royal Bank of Scotland Group (RBS) which only survives at all because it has been bailed out by the British taxpayer with Government ownership now at 70%. The grotesque mismanagement of this huge concern by its discredited CEO Sir Fred Goodwin and his cohorts is one of the business scandals of modern times â€“ but what can be rescued from this modern day bonfire of the vanities? Iâ€™ll leave others more qualified than I am to look at the financials of the RBS mess. But in Brand terms there is both a serious problem, but also an opportunity.
The problem is that the RBS brand is probably fatally damaged. True it may be possible if the RBS Group gets back on an even keel for its retail subsidiary of the same name eventually to re-establish itself as a valued brand in the eyes of the consumer. But that will take time and some smart brand and reputation management. RBS may eventually recover its brand equity â€“ but it will take many years for it to do so.
The opportunity comes from the fact that one of the earlier acquisitions in RBSâ€™s shopping spree was the old established British Bank â€œNational Westminsterâ€ (NatWest). NatWest has a network of over 1,500 branches in the United Kingdom and more than 7.5 million personal customers and 850,000 small business accounts. It is a significant player in British retail banking and, more importantly, it has a brand identity and reputation undamaged by the turmoil and reputation disaster of its RBS parent. It could be and perhaps should be cut adrift from RBS and allowed to be re-established as a strong principally retail bank unsullied by the RBS disaster.
The new management of RBS, including its majority shareholder the British Government, should see the separate stockmarket floating of NatWest as a real opportunity to start the long process of returning RBS to the private sector. In doing so there is also an added benefit to accrue by ensuring the newly independent again NatWest can be established as a truly sound enterprise, unblemished by any residue of toxic debt and unsullied by any other uncommercial liabilities. There is no reason why the relative strength of the NatWest brand shouldnâ€™t deliver shareholder value in excess of its fixed assets value â€“ the classic definition of a strong brand.