Need of the Hour : Redefining Banks and Increased Accountability
Banks have always played the number games and earning a high margin of returns against their funding or investments especially in the boom time or so it seemed. But with the current scenario of economic slowdown and uncertainties, the true scene comes to fore showing gross mismanagement of funds, misappropriation and in the inconsistencies in their work pattern.
Can we truly rely on banks with our money and to serve the society in the best possible manner? The saddest part in this story is the monetary loss, recovering of which remains highly uncertain and a big question mark ?
Bank management and top Bank officials top all earn well paid salaries and bonuses yet can wash their hand off through bad deals and wrong financial decisions by citing various reasons be them flimsy or be them true… but still they manage to get away…..remains a true fact.
Royal Bank of Scotland is perhaps the prime and right example of the grim situation we face today. Already under the government purview who already controls 58 per cent of RBS and set to control 70%, shows how vulnerable it is despite being centuries in existence.
Royal Bank of Scotland in the recent years embarked upon a buying spree and bought out several business in ABN AMRO, National Westminster (NatWest) and Charter One Financial in US. The Charter One Bank, US was most expensive another feather in its cap apart from buying 90+ business in United States. An unleashed buying spree and acquisition of assets took precedence for Royal Bank of Scotland rather than giving due attention to its revenue sources or effective utilization of its capital to strengthen its position in the market.
Last week, after issuing a formal apology for its losses, Royal Bank of Scotland announced slashing of 2300 jobs in Britain due to its condition and also hinted at a loss of approximately $41.6 billion in the financial year 2008 which will be declared at the end of the month.
After such dismaying announcement, another announcement its commitment to honour bonus payments to the tune of 1 billion pounds despite posting large losses proves the recklessness of the RBS. Just days before his ouster, it seemed normal and usual for Sir Fred Godwin to sign promotional contracts with Indian cricketing maestro Sachin Tendulkar and other sports personalities to the tune of 200 million pounds that too contracts lasting five years.
The Anger, the ire of the public all over is most logical and expected. They have already expressed harsh punishment in form of imprisonment and legal proceedings…But does this really happen and even if it does ….does it equate the trauma and the agony each customer of the bank undergoes leaving aside the financial loss.
