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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  The Royal Bank of Scotland Group plc    RBS   GB00B7T77214


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RBS to slash investment bank, rebrand as NatWest

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02/14/2020 | 05:00am EDT
FILE PHOTO: Royal Bank of Scotland signs are seen at a branch of the bank, in London

Royal Bank of Scotland's new Chief Executive Alison Rose unveiled a new strategy for the taxpayer-backed bank on Friday, including radically cutting back the size of its loss-making investment bank and renaming the company NatWest.

Rose, who replaced former CEO Ross McEwan in November to become the first woman to lead one of Britain's major banks, is hoping a rebrand will help rehabilitate the lender's image after years of scandals following a 45 billion pound taxpayer rescue during the 2008 financial crisis.

Although the RBS brand will live on in Scotland, the bank will stop using the 293-year-old name at group level and adopt the NatWest brand that grew out of National Westminster Bank, which RBS bought in 2000 and which consistently polls as more popular in customer satisfaction surveys in Britain.

The new strategy and better-than-expected profits were, however, overshadowed by a lower than expected eight pence dividend, sending shares down 6% in morning trading and demonstrating the challenge Rose faces to win over investors.

The payout will amount to 1 billion pounds, including a 600 million pound windfall for taxpayers, who still own 62% of the bank.

RBS Chairman Howard Davies told reporters the bank's preference was to use excess capital to buy back stock from the government as and when it restarts selling following the March 11 budget.

Rose's strategy includes plans to halve investment bank NatWest Markets' risk weighted assets to 20 billion pounds.

She also said making the bank greener would be a top priority to help tackle "one of the defining issues of our generation", following similar strategy updates by BP and Blackrock in recent weeks.

The bank will stop financing coal power stations by 2030 and is aiming to make its own operations carbon positive by 2025.


Analysts took a dim view of the update, with KBW saying there was "no end to the building site" at RBS and the outlook was "horrible".

"We believe investors will be disappointed with capital return," said Joe Dickerson, an analyst at Jefferies.

The lender reported pre-tax profits of 4.2 billion pounds for 2019, 24% higher than 2018 and above analyst expectations.

But the results were dented by a loss of 121 million pounds at NatWest Markets and a previously announced 900 million pound provision to compensate customers mis-sold loan insurance, part of a wider industry scandal.

Despite the planned cuts to NatWest Markets, the group signalled it will slightly ease the overall pace of cost-cutting, to 250 million pounds of savings this year from 307 million pounds in 2019.

However this will still likely result in further significant job cuts, after the group cut staff numbers by 3,000 in 2019.

Rose, who started as a trainee at RBS and has worked at the bank for more than 27 years, declined to comment on expected job losses this year.

The bank said it would target a reduction in its core capital buffer to 13 to 14% over the "medium to long term", down from 16.2% in 2019, and a return on equity of 9 to 11% over the same period after hitting 9.4% in 2019.

RBS confirmed Mark Bailie, the boss of fledgling digital bank Bo, had quit and would leave with immediate effect, amid investor concerns about the venture's commercial viability.

Bailie will be replaced by Marieke Flament, the boss of digital brand Mettle, who will run both businesses.

By Iain Withers and Lawrence White

Stocks mentioned in the article
ChangeLast1st jan.
BLACKROCK, INC. 4.84% 455.35 Delayed Quote.-9.42%
BP PLC 5.92% 323.6 Delayed Quote.-31.38%
THE ROYAL BANK OF SCOTLAND GROUP PLC -2.29% 117.4 Delayed Quote.-51.14%
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Financials (GBP)
Sales 2020 11 402 M
EBIT 2020 4 565 M
Net income 2020 1 030 M
Debt 2020 -
Yield 2020 10,2%
P/E ratio 2020 13,5x
P/E ratio 2021 7,17x
Capi. / Sales2020 1,24x
Capi. / Sales2021 1,22x
Capitalization 14 178 M
Duration : Period :
The Royal Bank of Scotland Group plc Technical Analysis Chart | MarketScreener
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Technical analysis trends THE ROYAL BANK OF SCOTLAND
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus HOLD
Number of Analysts 23
Average target price 201,99  GBp
Last Close Price 117,40  GBp
Spread / Highest target 243%
Spread / Average Target 72,1%
Spread / Lowest Target -24,7%
EPS Revisions
Alison Marie Rose-Slade Chief Executive Officer
Howard John Davies Chairman
Mark Bailie Chief Operating Officer
Katie Murray Chief Financial Officer & Executive Director
Sheila Valerie Noakes Independent Non-Executive Director
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