The RBS management team is coming under increasing pressure over its strategy post-credit crunch Picture: AP
ROYAL Bank of Scotland's senior management was last night accused of developing a "siege mentality" as the bank battles to counter allegations of U-turns over the implementation of its post-credit crunch strategy.
The criticism, from one of the Ed
inburgh-headquartered banks' institutional investors, came ahead of Friday's expected announcement of a loss of between £1 billion and £1.5bn by the bank. If the figure is confirmed it would be the largest loss in UK banking history.
Such an announcement in the half-year results would further increase the pressure on Sir Fred Goodwin, the RBS group chief executive, and Sir Tom McKillop, the chairman, who have been heavily criticised by some City investors.
The duo, under pressure for RBS's part in the £72bn purchase of ABN Amro last year as the credit crunch bit, are expected to deny that the board has made a series of damaging U-turns in strategy.
However, this explanation has not found favour with investors. One institutional stock holder told The Scotsman yesterday: "The denial of U-turns shows a siege mentality in the bank.
"They have changed their strategy and gone back on things they said. It is ridiculous to deny it, and they are under pressure."
The investor added: "Launching the consortium bid for ABN was a huge U-turn.
"They were trying to resurrect their reputation as a bank that could grow organically, that they were not deal junkies. So people were bound then to struggle with both the bid and the top price paid."
The investor maintained that the recent £12bn rights issue so soon after Goodwin had maintained RBS was adequately capitalised was also a volte-face.
RBS would not comment yesterday.
But Goodwin is expected to urge the City to focus instead on the underlying performance of RBS in the first six months of the year, when it is thought to have made a profit, stripping out the write-offs, of about £4.9bn.
One banking executive said: "In RBS's position it will want to stress that, under the bonnet, things are going well in terms of underlying earnings.
"Goodwin will say the headline loss is pretty much historic news as it could have been guessed from the time the write-offs figure was announced earlier this year."
Goodwin is expected to repeat on Friday that reaching the desired capital ratio of 6 per cent by the year-end is not dependent on any one disposal.
Speculation that RBS is also considering the sale of its 5 per cent stake in Bank of China, which it acquired three years ago, is wide of the mark.
The stake, which has gained £2.8bn in value since, is still understood to be strategic within the bank.
The full article contains 488 words and appears in The Scotsman newspaper.
