The Progress 1000: Many thorny issues for Alison Rose to tackle as she takes on the hardest job in British banking

One of six FTSE 100 female bosses faces share price pressure and tight competition
Alison Rose: the new Chief Executive Officer of Royal Bank Of Scotland
RBS via REUTERS

In a few weeks Alison Rose becomes the third Alison to be chief executive of a FTSE 100 company. Rose joins Alison Cooper at Imperial Brands and Alison Brittain of Whitbread. While the second two have endured their challenges and are among the top business people of the age, neither face quite the same heat as Rose at RBS.

(She will be one of just six FTSE 100 female bosses).

By common consent, she is about to take on the hardest job in banking. Which is probably the same as the hardest job in corporate Britain.

Since she was already deputy chief executive of NatWest Holdings, the biggest part of RBS, the temptation is to see her as the continuity candidate, whose main role is to continue the work of her predecessor Ross McEwan.

City watchers say her life won’t be remotely this easy. The banking industry is changing so quickly that she will be forced to, if not move fast and break things, certainly move fast and shake them up.

Customer behaviour is shifting faster than ever, and political turbulence affects RBS more than most companies. The shares are massively under the 500p at which the taxpayer bailed out the bank, and since RBS stock is chiefly a leveraged bet on the UK economy, there’s little reason to think it will improve any time soon.

The pressure from government to get the stock up to something approaching respectability — 300p? 250p? — so it can sell down its 60% stake, is persistent.

On the competition front, the challenger banks remain in the background, but the bigger threat is probably the technology players, the Monzos of the world rather than the Metros. (The failure of the challenger banks to make serious inroads is one thing in Rose’s favour.)

Can a clunky big bank like RBS hire the right tech people, or make the right acquisitions, to keep up with a changing game?

More prosaically, the environment for simple bread and butter banking — borrow at 3%, lend at 6% — has never looked so challenging. For banks to thrive, they need three basic things in place: interest rates above nil, a steep yield curve (so they can borrow short, lend long and pocket the difference), and wide credit spreads for corporate lending. Rose has none of those to play with. For City analysts, the question is what can she do about that? Heroically cut costs by pruning even more staff and branches, defying union and public anger in the process?

The thorns for Rose to tackle are myriad. And there remains the nagging feeling that, as the first woman to run a major UK bank, her progress will be measured partly on her gender. McEwan did a fine job. Rose could do just as well, but still end up regarded as having failed.

Moreover, while McEwan has done most of the heavy lifting in terms of resolving past conduct issues, he has been careful to remind analysts that they are far from all resolved. Just how much more trouble is coming down the track?

Questions for Alison Rose

  • Are you being forced to hold too much regulatory capital, dinting the chance of boosting returns?
  • Does the ringfencing of capital for retail banks mean there is too much capital sloshing about looking for a home? Hence the pressure on net interest margins?
  • Do you think there is a war going on in the UK mortgage market for share? If so, are you participating?
  • What’s the next PPI scandal that’s going to come and hit you? How can you prepare for it/prevent it?
  • Isn’t your private bank Coutts too small to succeed?
  • How many branches are you going to shut?
  • The investment bank NatWest Markets was loss making in the first half of 2019. What can be done about that?
  • You keep saying that you are going to accelerate personal unsecured lending. Do you really mean it?
  • How much more are you going to lose on Thomas Cook?
  • How much do you lose each year due to fraud? Is this going to get (a lot) worse?

The Progress 1000, in partnership with the global bank Citi, is the Evening Standard’s celebration of the people changing London’s future for the better and will be announced on October 3.

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