RBS to refocus CIB Investment bank on core market segments (plus updated FX scorecard)


RBS released full 2014 figures today, reporting £3.5bln loss (following £4bln write-down on US Citizens Bank), with operating profits were £3.5bln.

Significantly, RBS is further downsizing its Corporate and Investment Bank (CIB), in order to ‘create a more focused corporate and institutional bank’.

The report identifies the drivers for change being:

  • Returns are too low Costs are too high
  • Capital usage is too high
  • Operating risks are outside of our go-forward risk appetite

The CIB will reduce country operations from 51 in 2009, 38 in 2014 to a target of 13 by 2019.

RBS footprint

RBS country footprint for CIB by 2019

The strategy for the CIB business will be to create a:

  • Strong focused product offering:
    • Risk management: FX, Rates (USD, GBP and EUR)
    • Debt Financing: DCM, Structured Finance, Loans (USD, GBP and EUR)
    • Transaction Services: UK focused cash, payments & trade
  • International capability: Full service to UK and Western European clients/counterparts (9 European offices)
  • Distribution and trading hubs in UK, US and Singapore

In terms of their online digital strategy, they are targeting a Single digital platform for customers by middle of 2016. RBS’s Single-Dealer Platform called RBSMarketplace and Agile Markets which powers its global FX business, are built using the Caplin Platform.

RBS FX scorecard: Below is my analysis of RBS FX performance, based on the EuroMoney FX ranking. The tables show overall ranking, as well as by client segment and geographic region – the lower the number, the higher the ranking. As can be seen, between 2007-14 RBS ranking has fallen in every category, although their real FX strength remains a strong corporate franchise and footprint in Western Europe, which align with their 2019 ambitions below.

RBS Scorecard

RBS Scorecard based on EuroMoney FX rankings 2007-2014

RBS 2019 ambitions are to become:

CIB

Top 3 UK Rates, DCM, FX
Top 3 European Structured Finance
Top 3 Western Europe Investment Grade Corporate DCM

Commercial & Private Banking

#1 SME Bank
#1 UK Commercial Bank
#1 UK Private Bank
#1 UK crown dependencies

Personal & Business Banking

#2 UK Personal Current Accounts
#3 ROI Personal Current Accounts
#2 UK business bank main relationship

Slides here and full report here

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