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RBS CEO Hester: We can't afford to give up on banks

Stephen Hester, chief executive of Royal Bank of Scotland, pictured in 2011: The public has a right to be angry with banks.

Story highlights

  • Hester: We had a massive task on our hands when I returned to banking sector
  • Banks must move away from being masters, to being servants of their customers, he says
  • He says RBS has gone through the biggest restructuring of its kind in history
  • Hester: While public is right to be angry with banks, no one can afford to give up on them

When I returned to the banking sector three-and-a-half years ago, we knew we had a massive task on our hands.

It required both physical and cultural change of a fundamental kind.

The news of the last week has underlined the changes that are needed and which are painfully making their way through the system.

At its heart is moving banks away from being "masters of the universe" to being, once again, the servants of their customers.

Customers are right to be angry about mis-selling cases with retail or small business customers and about serious ethical issues uncovered in the Libor cases that seem likely to involve many banks.

This last week too, a systems failure at my own bank led to unacceptable inconvenience for our customers.

    At RBS we have our share of problems to correct from the past and just as we are working hard at putting our financial weaknesses behind us, so too must we cement cultural change.

    We are determined to put things right. But also, our systems problem reminded everyone just how important banks are to modern society.

    We heard difficult stories about the way our customers' lives were disrupted when the basic services they relied on were temporarily not available.

    We will have a full investigation into the causes of the problems and do all we can to ensure they do not happen again.

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    That realisation of how important banking is makes the anger banks are facing all the more troubling.

    About one million British people work in financial services. It is a vital industry to us all.

    The vast majority of our staff are good people, working hard, who care about our customers.

    When I returned to banking I found an industry that had expanded incredibly fast in the years leading up to the financial crisis.

    It was also an industry that had seemingly gone from success to success and frankly got too proud of itself and overconfident.

    My focus was on how to mend RBS and the way we serve those who rely on us.

    We knew in 2009 that the recovery would take five years. Looked at today, that might have been an underestimate. I said then that we needed both physical and cultural change.

    Job number one is for everyone at RBS to put our customers' interests first.

    Along with that is the need to deal with any issues where we got it wrong, especially any of impropriety, and show that we would take them very seriously.

    And we have also sought to build a new culture of accountability that was lacking across the banking sector in the run-up to the crisis.

    The second job was to physically change RBS. We needed to make it much smaller.

    We have shed hundreds of billions of pounds from our balance sheet in what has been the biggest restructuring of its kind in history.

    And as we have become smaller, our focus on our home UK market -- especially high street banking -- has grown in importance.

    Our physical change needed to reinforce our cultural change.

    That is why we have spent the past three years getting out of the activities our customers don't need and putting our resources back into the services they value and rely on.

    Our work at RBS is far from finished.

    Even now, as our systems problems show, we are encountering additional improvements we need to make.

    The scale of the problems of the past means that in the weeks and months ahead we will need to continue to explain what went wrong and what we are doing to fix things.

    But I hope that readers of this paper can agree with me that the changes we are making are vital.

    And I hope you will also agree that while you are right to be angry with the banking sector, none of us can afford to give up on it.

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