16th Oct 2014 14:24
LONDON (Alliance News) - Royal Bank of Scotland Group PLC will sponsor research to help customers understand the impact of interest rate increases, Chief Executive Ross McEwan said Thursday.
Speaking at the British Bankers' Association's annual conference, McEwan said the bank's mortgage customers are concerned that they might not be able to balance their household budgets when interest rates begin to rise from their current historically low levels.
McEwan said the research will investigate how information about interest rates in the economy is accessed, assessed, and acted on by the public.
"We know that many customers are left without a great deal of clarity on what might happen and what impact changes in rates may have on them. This causes understandable anxiety which adds further strain to the relationships banks have with their customers," McEwan said at the conference.
The CEO said that RBS will share the findings of the study with one of its regulators, the Financial Conduct Authority, as well as with consumer groups before the end of the year.
"Our customers expect us to handle this issue with transparency and with thoughtfulness. That is what our bank intends to do and what I think we as the UK banking industry need to do. Let?s use this moment to earn back some much needed trust," McEwan said.
The CEO warned that customers' anxiety comes despite banks' stress-testing of their customers' ability to cope with a significant rise in interest rates up to 7%.
But McEwan said the anxiety is understable, given that the Bank of England hasn't raised rates since 2007 and that more than half of RBS and NatWest mortgage customers have never experienced a base rate increase in their time as customers of the banking brands. He also said it was important to take into account that across the industry there are more than 1.5 million borrowers who bought their homes after 2007 and have never experienced a rate rise.
The RBS CEO said the bank will listen to customers' concerns.
"We want to talk to you about the state of your finances. And we will do all we can to explain to our customers well in advance how we intend to manage rate increases for both borrowers and the UK?s very patient savers," McEwan said.
RBS shares were Thursday quoted down 2.5% at 333.60 pence.
By Samuel Agini; [email protected]; @samuelagini
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
RBS.L