Shareholders put RBS under fire at AGM
The Royal Bank of Scotland&rsquo;s Chief Executive Ross McEwan stated that he expects a substantial increase in its capital as a result of disposals over the next few years &ndash; of which some will be returned to shareholders - and that it would take the government several years to sell its 78% shareholding in the bailed-out British lender.&nbsp; He also confirmed that it is selling its US bank Citizens Bank, for which is believed that RBS paid over the odds.&nbsp; However, the bank came under fire at its AGM as shareholders criticised the bank over &ldquo;systematic&rdquo; mistreatment of firms with distressed finances and queried the Chairman over the price the bank had to pay for market rigging as well as the mis-selling of financial products to customers.&nbsp; Chairman Sir Philip Hampton admitted that the cost of misconduct had been nearly &pound;10bn, which has held back the bank&rsquo;s recovery but that change in culture was &ldquo;well under way&rdquo;. &nbsp;
Sir Howard Davies, incoming chairman of the Royal Bank of Scotland, said on Tuesday that he saw his task at the bailed-out bank as ensuring that it achieved its “hugely important economic functions as efficiently as possible”. It was initially expected that Davies would take up his boardroom role after the bank’s annual general meeting at its headquarters on the outskirts of Edinburgh, but his appointment has been delayed while he finishes at the Airports Commission. As a result, he attended the AGM as a guest.

Speaking before the meeting began, Davies refused to be drawn on his precise plans, but said George Osborne’s announcement this month that the Treasury would start selling off its 79% stake in RBS pushed the bank into a new phase. He was hoping for an easier time as chairman than Sir Philip Hampton, who faced robust questions at the AGM.

“Hampton and his team have done a lot of the heavy lifting, so I’m hoping that the next five years will be easier than the last five years,” he said. “I think there’s a lot to do. The chancellor’s statement moves [the bank] into a new phase.”

Davies confirmed that his start had been postponed because of a delay in publishing his report on expanding London’s airports, which was due to be published last week, due to the unexpected need to carry out air-quality consultations. That report was due to be published “fairly soon”, he said. “I had always intended to join the bank after I had published the report.”

Hampton, who is to become chairman of GlaxoSmithKline, told Reuters that selling off the government’s stake would take “take several years”. “I’ve long thought the process should have started,” said Hampton, who joined the bank in January 2009, when shares were trading at the equivalent of 90p. They closed last night at 359.5p, still below the 502p average price that taxpayers paid for them.

At the meeting, activist shareholders repeatedly accused Hampton of incompetence during his tenure. Joel Benjamin, a campaigner with Moveyourmoneyuk, accused RBS of “callous contempt” by charging local councils unduly high commercial interest rates on loans. These were often more than double the 3% interest charged by the public works loan board.

Benjamin said Edinburgh council’s debts to RBS would cost it £110m in interest payments alone. Hampton retorted that banks would need to offer competitive rates of interest to win business, not overcharge, and had no reason to single out local councils. Rates of interest depended on the creditworthiness of the customer, he added. Hampton also admitted the bank had been wrong to make a pledge to keep open branches in 2010, since when branch usage had fallen 36%.

Chief executive Ross McEwan insisted that RBS is still on track to float its Williams & Glyn arm on the stockmarket in the final quarter of 2016, rejecting reports that unexpected delays were slowing down the task of hiving off the bank. It was, he said, “a very, very difficult piece of work, but we have over 4,000 members of staff working to get that business out and our endeavour is still to get it out by the second half of next year.” He added that a more precise target for floating Williams & Glyn was the final quarter of 2016, and would meet all the requirements “sent down by the EU”.

The crisis last week over RBS’s IT systems, which left 600,000 customers unable to withdraw money for several days, was “totally unacceptable”, McEwan added.