Magazine article Marketing

Mark Kleinman on Marketing and the City: Split Personality

Magazine article Marketing

Mark Kleinman on Marketing and the City: Split Personality

Article excerpt

RBS must maintain a fine balance if taxpayers are going to see a return on their pounds 20bn investment.

Stephen Hester, the chief executive of Royal Bank of Scotland (RBS), could not contain his irritation last week at the public flogging his company received as it reported another gloomy set of results.

'We sometimes feel as if commentators variously want us to go back to over-lending, to operate on a 'not-for-profit' basis, never to entertain a client and to offer employment conditions that deter the best and brightest,' he said. 'Oh yes, and at the same time to pull off a recovery enabling taxpayers to recoup the support given.'

Such is the lot of the modern bank boss, but, being parachuted into the middle of the gravest financial crisis in generations, Hester was never going to land on a bed of roses.

RBS is in an unusual position, and so is its marketing department. The bank has to act along commercial lines while being careful not to abuse its position as a mostly publicly owned entity.

Targeting the customers of Barclays and HSBC, which have not received direct taxpayer support, and exhorting them to move their savings to the security of government-backed RBS, is definitely not on the agenda.

This schizophrenic existence is causing chronic uncertainty, and not only in the City. Last week, as the RBS share price rose for the first time above the average price at which the government bought in during last autumn's pounds 20bn rescue, it was tempting to celebrate the prospect (admittedly still a long way off) that taxpayers will eventually get their money back.

Pessimists took the opposing view: they are increasingly fearful that the European Commission will rule that the state aid package enjoyed by RBS requires remedies far beyond those proposed by the bank itself.

In UK retail banking, it is Lloyds Banking Group that is likely to come off worst from the deliberations of Brussels-based bureaucrats: significant chunks of the Halifax or Lloyds TSB networks are likely to have to be sold off to satisfy competition concerns.

For RBS, the most obvious problem is its large market share in the SME sector. Hester has already acknowledged as much, but that is a price he will consider worth paying given that the bank would not have survived at all without government support last year.

There may also be mileage for RBS in reducing the exposure of the parent group's brand, if it is to rebuild its image. Sources close to RBS have told me that it is considering rebadging its sponsorship of the Six Nations under the NatWest brand. …

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