Royal Bank of Scotland Group plc (Europe)

THE SCOOP

Royal in name and lineage

The Royal Bank of Scotland Group (RBS) was chartered by King George in 1727. At the time, its only rival was the non-royal Bank of Scotland. For the first 50 years of its existence, the Royal Bank operated from a single location in Edinburgh, but in 1783 it opened a branch in Glasgow. By the 1870s, RBS had set up shop in London, and from there it grew rapidly, acquiring a number of English banks and opening a New York office in 1960. More mergers followed in modern times, as RBS swallowed the National Commercial Bank of Scotland in 1969 and celebrated Britain's biggest bank takeover with the 2000 acquisition of National Westminster Bank (NatWest). Then in 2007, RBS led a consortium to acquire ABN AMRO, marking the biggest bank takeover in the world.

The Royal Bank of Scotland has 10 main divisions: U.K. corporate banking, U.S. retail and commercial banking (which offers services through the Citizens and Charter One brands), global banking and markets, risk and restructuring, support (HR, strategy, and communications), U.K. personal banking (which operates through the RBS and NatWest brands), RBS Insurance, EMEA retail and commercial banking (through the Ulster Bank brand), global transaction services, and finance.

The worst is (hopefully) over

The Royal Bank of Scotland set a record in fiscal year 2008-but it wasn't the kind of record any bank wants to set. The bank's annual loss of over £24 billion represented the biggest annual loss of any corporation in British history. In February 2009, one week after dropping that bombshell, RBS became the first bank to join the British government's asset protection program for troubled institutions. The asset protection plan allowed RBS to move £325 billion of toxic assets from its global markets division into a taxpayer-backed pool. In exchange, RBS promised the government it would divest itself of any remaining illiquid assets within five years, and vowed to increase lending. It also gave the British Treasury preferred shares worth £19.5 billion.

The asset-relief plan was not the first time RBS had turned to the Treasury for help. In October 2008, RBS accepted funds from a £50 billion bailout plan, a move that left the British government with a 70 percent stake in the bank. The events of early 2009 meant that the government's stake in RBS would rise to nearly 95 percent. But as of the fourth quarter of 2014, that stake had shrunk to 79 percent.

Changes at the top 

The financial crisis led to a massive shake-up at RBS, as former chief executive Sir Fred Goodwin and former Chairman Sir Tom McKillop were deposed in 2008. Calls for their resignation mounted in as RBS accepted bailout funds from the Treasury; the bank initially brushed off rumors that the two men might leave. It was Goodwin who had built RBS's reputation as a ruthless, acquisition-hungry predator that wasn't afraid to eliminate thousands of jobs at a time (his nickname: Fred the Shred). He supervised a megamerger with rival NatWest in 2000 and led the RBS-backed consortium that bid £54 billion for Dutch giant ABN AMRO in 2007, despite early signs of the coming credit crisis. Goodwin also raked in more than £4 million in annual compensation, making him an easy target for shareholders' ire.

In October 2008, RBS announced that Goodwin would resign and be replaced by newcomer Stephen Hester, chief executive of British Land. Chairman McKillop agreed to step down at the RBS annual meeting in April 2009, at which point he was replaced by Sir Philip Hampton.

With new management secured and the Treasury's toxic asset plan in place, in early 2009, RBS hunkered down to plan its way back to profitability, which included ceasing to operate in dozens of countries in which it did business. It also intended to realise a one-sixth (about £2.5 billion)reduction in costs, which utlimately included 40,000 layoffs.

In 2014, the bank was at it again. In February 2014, Royal Bank of Scotland CEO Ross McEwan, who took over the chief executive post from Stephen Hester in late 2013, announced that the bank would be cutting some 30,000 employees as part of a plan to scale back its investment banking business and focus on retail banking in the U.K.

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Royal Bank of Scotland Group plc (Europe)


36 St. Andrews Square
Edinburgh EH2 2YE
Phone: +44-0-131-556-8555
Fax: +44-0-131-557-6140
www.rbs.co.uk

STATS


  • Employer Type: Public
  • Stock Symbol: RBS
  • Stock Exchange: NYSE
  • CEO: Ross Maxwell McEwan
  • 2014 Employees: 113,600

Major Office Locations

  • Edinburgh, United Kingdom

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