McEwan paints sunny outlook as he reflects on annus horribilis for workers

Royal Bank of Scotland chief executive Ross McEwan has admitted publicly that last year was the worst in terms of staff morale that he had experienced since taking the reins at the still 73 per cent state-owned bank.

Responding to questions about morale at RBS while appearing at a banking conference in London, Mr McEwan said 2016 was its “worst year for people engagement” at the Edinburgh-based lender since his appointment as CEO almost four year ago.

His address at the Bank of America Merrill Lynch event saw the Kiwi, who has recently been linked to a possible return to former employer Commonwealth Bank of Australia, concede that the fallout from the shedding of “13,500 colleagues” from RBS’s workforce had taken its toll.

Those job losses were part of a heavy, ongoing cost cutting strategy as the bank has shrunk its geographical footprint from 38 countries to 16 countries.

Those culls were also carried before the backdrop of the fallout of various scandals that have continued to rock the bank, such as legal actions from shareholders over its 2008 rights issue, the probe into its controversial Global Restructuring Group for business customers, as well as multi-billion penalties imposed by US authorities over the pre-crisis sub-prime mortgage scandal.

Those scandals have compounded the woes of the bank’s beleaguered workers, and with RBS is still targeting yet more savings of £750m this year, and £2 billion in total by 2020, more pain is seemingly inevitable as Mr McEwan acknowledged such a strategy “doesn’t come without consequences”.

But citing the results of internal bank surveys as reason for his optimism, as well as the bank’s latest first quarter and half-year results - which have also both shown profits - Mr McEwan told his audience that morale is actually improving.

And despite the bank still waiting to make its first full-year profit in 10 years, he felt able to say, “It makes a difference when you see success”.

This month’s news that the European Commission had allowed RBS’s alternative plan to its selling off of a tranche of its branches and business to satisfy the conditions of its £45 billion bailout also added to his upbeat outlook as he predicted that the settling with the US Department of Justice over the mis-selling of residential mortgage-backed securities for £4.2 billion was the “last big one” he expected to hit RBS.

Given his sunny view of the future, Mr McEwan was also given to say that he intends to resume dividend payments.

“Ewen and I would like to see the dividend flowing to get more investors into the stock,” he said.

While also saying that he would like to recommence share buybacks, Mr McEwan said such developments would have a positive “psychological” impact on staff and investors.

Referring to recent questions over his own personal future at RBS, he said he would like to be around “to get a little bit of the credit” once dividends are restored.