Profile: Ian Cowie

IT seems hard to believe now, but a job at the bank was once regarded as the perfect role for somebody who wanted a steady career with no nasty surprises.

Then along came the financial crash of 2008, the taxpayer bail-outs, the mis-selling scandals and the outcry over bonuses. The industry is in the doghouse. Many small businesses are fighting for survival after being mis-sold complex derivatives which left them with crippling debts.

Some companies that were victims of mis-selling have already gone bust. Many entrepreneurs claim that they still don’t get a fair hearing from the banks when they ask for a loan. They would love to see a return to the days when more power rested on the shoulders of their local bank manager, who really understood them and their business.

So Ian Cowie, Royal Bank of Scotland’s chief executive of Business and Commercial Banking, has an in-tray that would terrify more timid souls.

But the affable Mr Cowie, who joined the NatWest straight from school, clearly relishes his job. He’s in charge of all NatWest and RBS lending to SMEs (small and medium-sized businesses), and, as part of his fact-finding duties, he spent two days in West Yorkshire meeting around 100 businesses and advisers. His message was simple. RBS is open for business.

His trip was overshadowed by the publication of a review, led by former Bank of England deputy governor Andrew Large, which concluded that RBS had failed to support small businesses in a way that met its own targets and the expectations of customers.

Mr Large’s report noted that RBS’s market share of small business (SME) lending had fallen steeply from 2010 and would continue to fall below the level expected, given its number of customers.

The review attributed much of the decline to the fallout from RBS’s £45.5bn bailout in 2008, which left taxpayers holding an 81 per cent stake. RBS has since focused on selling off or winding down its riskiest loans in order to strengthen its financial position.

RBS’s total lending to small businesses was £55bn when the market was at its height in early 2009, and has since fallen to £38bn. Its market share of small business lending among high street banks has fallen to 33 per cent from 40 per cent at the peak.

Mr Cowie didn’t dodge the painful subject of credibility.

“We know that we’ve got to work hard to rebuild the confidence in the bank and we’re doing exactly that,” he said.

“Unquestionably, there are things we can do better. We need to be quicker and we need to get slicker in some of the processes we use. There’s a huge amount of focus being placed on the importance of the relationship manager. We’ve invested an awful lot of time over the last two years, rebuilding that capability.”

The Large report said that RBS needed to strengthen its grass roots’ teams. Many customers were alarmed by the large number of experienced bank managers who left RBS in the years leading up to the financial crash. If they’d been left in charge would things have turned out differently? The past cannot be undone, but Mr Cowie is determined to beef up the quality of the relationship managers.

“We certainly lost some experience going into the recession,” he said. “Like any good business, what you need is a mixture of experience and new blood coming through.

“People want to see people with grey hair sitting around the table. We know that we need to put a training accreditation programme in place to build on that experience, but also to allow some of the youngsters who are ambitious for themselves and ambitious for the business to come through and perform.

“That’s a really important thing. There are some improvements needed but we’ve made some really good progress.”

“We’ve made no secret of the fact that we’ve got a surplus of deposits over lending. We want to put those deposits to good use. The best way we can put them to good use is to support our customers. That’s exactly what we’re going to do.

“For us, it’s hugely important that we make all the channels available and open up the access points for people to borrow from us, but we know there are still people wary of approaching the bank because they feel that the banks aren’t open for business.

“What we need to do is take as many of those barriers down as possible.” According to Mr Cowie, the commissioning of the Large report was part of a strategy of engaging with business.

“We will implement all of the recommendations,” he said. “We responded immediately with some initial commitments.

“People want to make sure that they get good support and good advice and the right decision. Sometimes the right decision is to say, ‘Sorry I can’t help you’.

“We need to be able to demonstrate that, if there are other opportunities and ways in which we can support that customer, we should be signposting them towards them.

“It’s important that the relationship manager challenges the customer.”

The banking industry is facing a big compensation bill after a review of interest rate swaps sold to small businesses found that more than 90 per cent had been mis-sold.

Interest rate swaps are complicated derivatives that might have been sold as protection – or to act as a hedge – against a rise in interest rates.

In many cases, the customer did not fully grasp the risks involved. They were marketed as low-cost protection against rising interest rates, often as a condition of a business loan. But businesses were left with colossal bills after the financial crisis caused interest rates to plummet to historic lows. Has this mis-selling made it harder to build up a relationship of trust between the banks and small businesses?

“Clearly, there are a number of issues that have led to a breakdown in that trust,’’ said Mr Cowie.

“They have been well articulated over the years. Our primary focus is to rebuild that trust and confidence. The best way we can do that is to be very open and transparent.

“Yes, we’ve made mistakes in the past, there’s no question about that. With the interest rate swaps, we’re working with the FCA (Financial Conduct Authority) through a process as quickly as we can. We’re making some good progress and we will continue to make sure that we get to the right decisions for the customer.

“Lending is a very important part of our day job. We’ve got a market share of 24 per cent nationally. We account for 35 per cent of all lending into the SME market.

“We’re the biggest player in the SME market. I want us to be the best player in the SME market. So we need to continue to lend responsibly.”

Ian Cowie Factfile

Name: Ian Cowie

Date of Birth: July 2, 1960

Title: The chief executive for business and commercial banking, at Royal Bank of Scotland.

First Job: I had a job in the NatWest Bank, printing cheques.

Education: The John Bramston Comprehensive School in Witham, Essex

Last Book Read: Under London, by Peter Ackroyd

Car driven: BMW X5

Favourite Song: Your Song, Elton John

Favourite Film: Top Gun,

What is the achievement he is most proud of: My four children: Grant, James and twins Joshua and Hannah.