Reforming RBS - Local banking for the public good

The total price paid by taxpayers for their majority stake in RBS since it was rescued from bankruptcy by a large injection of public funds in 2008 has now exceeded £45.5 billion. With questions over the future of RBS placing the public interest at stake, the persistent assumption that the bank should be returned to the private sector deserves greater consideration, scrutiny, and debate.
(...)

Contents

• Summary p.2
• List of figures p.4
• List of tables p.5
• 1 Introduction – the unanswered question p.6
• 1.1 Options for RBS p.6
• 1.2 Our research approach p.7
• 2 The case for local stakeholder banks p.9
• 2.1 Odd one out - the UK banking system p.9
• 2.2 Theory – market failure and the need for diversity p.11
• 2.3 Evidence – the benefits of local stakeholder banks p.16
• 2.4 Analysis – assessing the risks of local stakeholder banks p.25
• 3 Reinventing RBS as a citizens’ bank p.30
• 3.1 The public service mandate p.30
• 3.2 Focus on UK retail banking p.31
• 3.3 Local scale 34 3.4 Ownership and governance p.37
• 3.5 Dealing with practicalities p.42
• 4 What would it look like? Illustrative case studies p.51
• 4.1 Sparkasse Dortmund p.51
• 4.2 Royal Bank of Bradford p.53
• 4.3 Sparkasse Oberlausitz-Niederschlesien p.54
• 4.4 Royal Bank of Cornwall (Arghanti Kernow) p.55
• 5 Evaluating the alternatives p.57
• 5.1 Prospects for RBS privatisation p.58
• 5.2 Impact of reforming RBS as a local stakeholder banking network p.60
• 5.3 Organic growth of local banks p.66
• 5.4 Conclusions p.68
• 6 Recommendations p.70
• Appendix A1 Allocation of RBS assets p.73
• A2 List of local banks based on local authority areas p.74
• A3 Whatever happened to the real Trustee Savings Banks? p.75
• A4 Calculation of impact on GDP and SME credit p.76
• Endnotes p.79