Royal Bank of Scotland Group Plc

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Royal Bank of Scotland
Founded 1727
Headquarters UK
Key People Stephen Hester, Group Chief Executive; Sir Philip Hampton, Chairman
Products Financial and banking services

The Royal Bank of Scotland Group owns The Royal Bank of Scotland, a leading financial services provider and one of the oldest banks in the UK.

In addition to the UK, RBS has offices in Europe, the U.S. and Asia. By the end of 2002, it was the second-largest bank in Europe and the fifth largest in the world by market capitalization.

It became one of Europe's biggest corporate lenders, and a major acquirer, with more than $70 billion of takeovers since 2000.

However, RBS's fortunes began to turn sour after it led the world's biggest banking takeover, paying 72 billion euros ($97.7 billion) for ABN Amro Holding N.V. (along with Fortis of Belgium and Banco Santander SA of Spain). Many criticized RBS, saying it paid too much, and Standard & Poor's cut its credit rating for the first time since 1998. RBS shares plunged 82 percent in London trading on doubts that the company, with the lowest capital reserves among its British competitors, would be able to sustain itself.[1]

In 2008, the company agreed to take part in a 50 billion-pound ($68 billion) bailout by the U.K. government in a rescue package designed to help British banks by providing up to 250 pounds of loan guarantees to help refinance debt and unlock frozen capital markets.[2]

The investment bank was shrunk by a third and Citizens, its US consumer arm, is preparing for flotation.[3]

After losses in 2013, RBS chief executive Ross McEwan said the company would reduce its global presence and make operations less risky, cutting it down from seven divisions to three.[4]

In June 2015, the U.K. government said it would start selling shares in RBS within months in a long-anticipated but highly symbolic move to show the country had moved on from the financial crisis. The British government’s 80% stake is worth £32.1 billion ($49.2 billion).[5] Chancellor George Osborne said any further delay in selling the shares could jeopardize the economy.[6]


The Royal Bank of Scotland was founded in Edinburgh by Royal Charter in 1727 and for several decades traded solely from its head office in the city's Old Town. In 1783, RBS opened its first branch office in Glasgow and went on to develop a network of offices throughout Scotland during the 19th Century.

In 1874, it opened a branch office in London and from the 1920s, through acquisition, developed a large presence in England. Banks that joined the group during these years included Drummonds (established c.1712), Williams Deacon's Bank (established 1836), Glyn, Mills & Co (established 1753) and Child & Co (established c.1580), with business in London, north-west England and overseas.

By 1970, following a merger with the Edinburgh-based National Commercial Bank of Scotland and the Commercial Bank of Scotland, RBS accounted for more than 40 percent of Scotland's banking business.

Under the Williams & Glyn's Bank banner, it also had a growing presence in England and Wales. In 1985, Williams & Glyn's merged fully with the group's Scottish clearing bank which, thereafter, traded throughout Britain as a single entity - The Royal Bank of Scotland.

During the 1980s, the RBS Group diversified; it set up the car insurance company Direct Line in 1985 and acquired Citizens Financial Group (established 1828) of Rhode Island in the USA in 1988.

During the early 1990s, it focused on its core business of retail banking, acquiring the private bank of Adam & Company (established 1983) in 1992. In 1994 RBS launched direct banking, which quickly became Britain's fastest growing 24-hour telephone banking operation. In 1997, it announced the UK's first on-line banking service and also embarked on joint financial services ventures with Tesco and Virgin Direct.

In 2000, in the biggest takeover in the history of British banking, the Royal Bank acquired National Westminster Bank Plc to create a highly diversified portfolio of services for personal, business and corporate customers.

NatWest's retail bank continues to operate as a distinct and separate brand.[7]

Facing the biggest loss in British history, Royal Bank of Scotland Group Plc in January of 2009 promised to make 6 billion pounds ($8.7 billion) available to U.K. borrowers as the lender took one of a handful of steps toward full government control. In exchange for government guarantees on losses from toxic debt, the bank will have to sign a binding agreement with the Treasury on how much it will lend and on what terms. Auditors will move in to check the bank is following the government directive.[8]

On July 18, 2011, the head of restructuring and risk at RBS, Nathan Bostock, announced his resignation and his move to rival bank Lloyds Banking Group (LSE: LLOY.L), effective in late 2011.[9]

On July 19, 2011, RBS was sued by federal regulators for the selling of overly risky and falsely advertised mortgage securities to Western Corporate Federal Credit Union. RBS could ultimately pay $629 million in damages following the failing of the San Dimas, Calif. credit union.[10]

On August 5, 2011, RBS reported a hefty first-half net loss. The company cited charges for the selling of fraudulent payment-protection insurance and a markdown on Greek bonds as causes for the trouble. Chief Executive Stephen Hester was quoted as keeping a "calm and purposeful" resolve during the crisis, admitting that the economic recovery in 2011 was much slower than he expected and had thus made it difficult for RBS to move forward.[11][12]

In February of 2013, RBS agreed to pay criminal fines of $150 million to the U.S. Justice Department, and a $325 million civil penalty to the Commodity Futures Trading Commission, for its participation in the LIBOR manipulation scandal. An additional penalty of £87.5 million, or $137 million, was levied by the Financial Services Authority in Britain for a total of $600 million.[13]

On June 12, 2013, RBS announced that Hester would step down as chief executive at the end of the year.[14]

In August 2014, RBS disbanded its Global Restructuring Group in the midst of fending off allegations that the Group tried to profit by putting struggling companies out of business, according to a Wall Street Journal story. Derek Sach, the head of the division, and Aubrey Adams, head of property operations within the unit, would leave the bank, the story said.[15]

In August 2014, The Financial Conduct Authority said it had fined Royal Bank of Scotland Group 14.47 million pounds ($24 million) for giving clients poor advice on mortgages.[16]

Products and Services[edit]

The Royal Bank of Scotland provides personal banking services such as mortgages, loans, investment and insurance; commercial banking for small businesses; and a full range of services in the global financial markets for international corporations and institutions.

Key People[edit]