Should the Royal Bank of Scotland be privatised next year, or should the government hang on for a higher price? Should the Treasury aim to maximise the cash raised from a share listing, or would it be better to give them away to the public? Most of the talk around the search for a successor to Stephen Hester RBS's outgoing chief executive has centred on how quickly it should be returned to the private sector and in what form.
But this overlooks a more important issue. What kind of bank do we want RBS to be? Britain is lumbered with a reckless financial industry with a record of abusing its customers that can only be sustained because it's very hard for new banks to join the market. Putting another banker in charge of RBS won't change that. The Treasury needs to find someone from a completely different industry, who knows about customer service and innovation.
The betting on who will take charge is restricted to a narrow range of candidates. Ladbrokes has Nathan Bostock, the finance director who joined from Santander in 2009, as the even-money favourite. Cameron Clyne of the National Bank of Australia is quoted at 4-1, as is David Roberts, deputy chairman of Lloyds. Standard Chartered finance director Richard Meddings is on 5-1.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Get 6 issues free
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
There are a few outsiders, such as Ross McEwan who runs RBS's retail unit; Ana Botin, who runs Santander in Britain; or Paul Tucker, who is stepping down from the Bank of England. If you feel very brave, or have just had a bit too much to drink, Ladbrokes offer 1,000-1 on Gordon Brown though you might be better off taking the 66-1 Paddy Power are offering on David and Victoria Beckham's next baby being called Ralph, or the 125-1 on Colin Firth being the next James Bond.
So the main names under consideration are career bankers. Yet George Osborne surprised us all when he chose Canadian Mark Carney as the new head of the Bank of England, rather than an insider. He saw that without someone different at the top, nothing would really change and the Bank's record was not so successful that carrying on as before was an option.
He should do the same at RBS. The hard-work of cleaning up RBS's balance-sheet after the madness of the Fred Goodwin era is not yet complete. There are still lots of loans to sort out and if Britain goes into a fresh downturn, there will be more losses to come. But under Hester, much of the hard work has been done. The CEO's role now is not about emergency surgery. It is about a long-term recovery strategy.
British banking badly needs reinvigorating. It is hard to think of a more badly run collection of companies. The high-street banks have treated customers with astonishing indifference. In any other industry if you sold billions of pounds worth of useless, misleadingly advertised products, such as payment protection insurance, you would be out of business.
Yet the banks still have high charges for poorly designed services and are now looking for ways to get away with charging people for current accounts, just as technology should be making them cheaper (if Google can provide me with free email, maps, and picture storage, why do I need to pay the bank to process a few payments a month online?). They persist with an antiquated business model that involves having thousands of branches, even though it is hard to see why anyone goes into one these days.
The banks only get away with it because the regulators make it hard to join the market, and because it's hardly worth the effort for customers to change provider when there is not much reason to suppose the next one will be much better. What RBS needs is someone who knows how to deliver value, customer service and innovation. True, Andy Hornby moved from Asda to the Halifax and turned out to be a catastrophe but that was before the credit crunch, when the emphasis was on market share rather than service.
Who should they approach? Justin King, boss of Sainsbury's, is one option. He turned around the supermarket chain and managed to outpace the ferociously competitive Tesco. He would have fresh ideas on improving customer service. Or Ryanair boss, Michael O'Leary? He knows all about radically redesigning a traditional product so it can be offered at a far cheaper price. He'd be worth it just for the soundbites at the annual results statement.
More radically still, how about Sir Jonathan Ive, the British-born head of design at Apple, the man who bought us the iPod, iPhone and iPad? He might be tempted to bow out of Apple at its peak. And no one would be better at radically reinventing banking based around technology. The chances are that the smartphone will become our main banking tool, and Apple, Google and Facebook are already the companies most likely to blow the industry apart. RBS could get there first.
Any one of these would surely be better than just another faceless banker. That would mean no real change in the way RBS is run. And that surely would be a wasted opportunity because none of the British banks are well managed and the government should at least try and change the one it controls.
Sizzling sales at Sysco – should you invest?
Profiting from private markets has become more affordable
Gordon Brown to take over at RBS – and five more predictions for 2015