The chairman of RBS’ Scotland board says his group is punching well above its weight when it comes to lending to small and medium-sized businesses.
But Ken Barclay, who took over stewardship of the Scottish arm of the 81% taxpayer-owned banking giant last year, said low business confidence had resulted in a lack of demand for finance and revealed that existing business overdrafts and other facilities were at less than 50% of their capacity.
And he insisted that improving service to customers would be the key way in which the group could repair a reputation battered by mis-selling, Libor and IT scandals, and return to profitability.
“Across the UK, RBS has a 24 or 25% market share, but our lending is about 36% of the incremental share so we are punching well above our weight,” Mr Barclay told The Courier.
“We lent £2 billion to SMEs in Scotland in 2012, so we are doing a lot. Could we do more? Undoubtedly we could. But I fundamentally believe that there is an issue of confidence.”
The proportion of drawings from already-arranged RBS overdrafts and other business facilities sits at around 45%, Mr Barclay said, demonstrating a lack of demand from cautious business owners.
“Even with the commitments that we have made, many people are not accessing that funding,” he added. “There is a lack of confidence about growth prospects.
“I would accept the charge that we are not lending to everyone and with some businesses it is not the right thing to do to lend. But we are agreeing the vast majority of good proposals we get, and we’ve got the capacity and the liquidity to lend many billions more across the UK.”
Mr Barclay also welcomed a “beefed up” Funding for Lending scheme announced by the Bank of England earlier this week, which he said would reduce the cost of the lease finance RBS provides.
He said the bank continued its efforts to “look after its customers better” after “losing focus” ahead of the 2008 industry crisis.
Taking Scottish board meetings across the country the first of which was held in Dundee on Thursday is one of a string of ways the bank aims to improve service to both retail and business customers.
Its online and mobile banking options have also been hailed, while it has also extended services to 1,400 post offices across the UK.
“We want to get closer to build relationships with a broad community of our customers and to understand their businesses better than we ever have,” added Mr Barclay.
He said security and soundness had been brought to the group’s balance sheet, while the bank’s loan-to-deposit ratio was back on an even keel and legacy issues like PPI had been addressed.
“I’d like to think we are on track to become a profitable organisation which is then in a position for the Government to begin to reduce its stake.”
Mr Barclay also welcomed the prospect of a return to the high street for TSB following Wednesday’s announcement of a likely share offer for 632 Lloyds Banking Group branches under orders from European regulators.
RBS could yet launch an IPO of its own for some 316 branches it has been told to dispose of.
“We stand or fall by the quality of our service,” Mr Barclay said. “I’m all in favour of more competition on the high street.”
And he said the wholesale regeneration of Dundee would offer “fantastic opportunities” for his bank to support businesses setting up in the waterfront area.
“From our point of view, if there’s more business coming into Dundee, we’ll certainly be checking out those opportunities with great interest,” he added.