Sooner or later, I suppose, I had to join the media chatterati gabbling on about the banks and how horrible they all are. So what better way to end 2009 than by scribbling my tuppence worth about RBS & Co? For month after month, it seems, we have been bombarded with news about Scrooge banks.
Of course, there have been plenty of politicians only too happy to jump on to that particular bandwagon, opening their mouths before putting the brain in gear.
A classic example is the cringe-making braying of Dumbarton MP John McFall, who chairs the Treasury Select Committee and yet has, himself, been grilled over his expenses, which he claims were totally legitimate.
However, there is a serious point. I have been accosted time and again by oil&gas supply-chain bosses, plus a scattering of North Sea minnows, about the lack of liquidity.
Two bank brands have popped up monotonously in such conversations – RBS and Bank of Scotland – and the manner in which they have clammed up on lending, even to apparently solid companies with a reputation for financial probity.
Energy has been told that RBS has, for example, quietly jacked in its specialist oil&gas teams. Henceforth, it is up to area managers as to whether they pursue oil-related lending/debt facilitation or not.
As far as I can see, local control can be a two-edged sword. In the days before Thatcher set about promoting greed like no other prime minister before or since, local management had the reputation of knowing the customers on their books pretty well and had a fair amount of autonomy in terms of decisions made. Or at least that’s the misty-eyed recall of many.
In more recent times, banks such as RBS formed specialist teams which hunted in packs. One would see them on the Press and Journal/Munro annual treks to the Offshore Technology Conference in Houston. But not the 2009 show. Had they been fired by then or were they keeping their heads down? I simply don’t know.
And now we’re apparently back to the local management approach, at least at RBS. Trouble is, society has changed; the relationships of old can probably never be re-created. Local management is a different animal today and, never forget, call centres are mostly somewhere overseas and populated by people who have never set foot in Europe, let alone Scotland.
Meanwhile, it seems that Barclays Bank has taken advantage of the situation and taken on at least one of RBS’s scalp-hunters.
In Scotland, it should never be forgotten just how little choice most business folk have traditionally had in terms of banks other than the ubiquitous RBS, BoS and, I suppose, Clydesdale. There are, in contrast, only three branches of Barclays in Scotland.
One Scottish businessman who has built an empire worth north of £100million a year turnover out of the North Sea told me that the business community had shown enormous loyalty to RBS and BoS. Sadly, that is no longer reciprocated, assuming it ever was in the first place.
He told me that the lack of liquidity was proving a nightmare, even for prudently run firms that traditionally carried little or no debt.
He asked: “How, for example, can a front-end small to medium-sized operator who requires access to cash to go and develop opportunities in the North Sea actually do that any more?
“How do they get the cash when these two giants … and they were … have gone the way they have?
“They were very Scottish. They’re not Scottish any more. I think that Scottishness has mostly evaporated from both, if not gone entirely.
“I think the benefits that we once had from having these two powerful organisations at the heart of the Scottish economy were being lost even before the credit crunch.
“Today, I worry that there isn’t enough money flowing quickly enough to the right places to reinvigorate activity in the North Sea. Look, oil is at $80, yet there is barely any new field development activity going on.
“Look out across the Cromarty Firth and you will see plenty of evidence that what should be happening in fact is not happening. It’s a strange paradox.”
Another aspect of that paradox is that the banks have, it appears, done rather well out of the North Sea industry and internationalisation of the oil&gas supply chain. It is a robust industry – one that is probably better conditioned to coping with varying fortunes than most other industries in Britain today.
Yes, Oilexco failed, both Ithaca and Bowleven came close to call, and a fair number of other North Sea minnows are in trouble and could get eaten, but I would argue that the number of oil&gas-related companies that have gone bust as a result of the double whammy of the credit crunch and oil-price roller-coaster has, in fact, been small.
This industry is both a national and international asset and may be among the best investment bets of all for the banks to get behind. The private-equity sector has certainly clocked this and there is a lot of positioning quietly going on in Aberdeen, especially.
Even after the drastic thinning out of the past year, notably at 3i, they are back out there stalking potential targets, and 2010 could even turn out to be a near vintage year for this particular fraternity.
So, Stephen Hester, and your many faceless colleagues at the big UK banks, don’t remain so inwardly focused that you miss potentially excellent opportunities in this great industry that, once again, looks like becoming Britain’s economic lifebelt, Treasury permitting.
And at the heart of that economic lifebelt in terms of real activity is, of course, Aberdeen – which, as those of us who live in and around the place know, has its own rather long-running crisis, to the point that the centre of the city, especially, is dreadfully run-down, despite a massive new retail complex down by the railroad station.
Moreover, if there was ever to be an award for the most potholes around town, I reckon the Granite City would be a hot contender. Winter has barely started and the town’s roads are in the worst state I have ever seen. That is not a good image for Europe’s Energy Capital to have.
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