Financial services group RBS has already spent an extraordinary ten years digging itself back out of the hole into which it collapsed during the 2008 financial crisis, but that Herculean task is still far from over. The Royal Bank of Scotland first took a quantum leap into the upper ranks of the global industry in 2000 with the hostile takeover of UK consumer bank NatWest. The success of the NatWest takeover prompted RBS's then-CEO Fred Goodwin to embark on a string of ever larger acquisitions which were ultimately to prove disastrous. The crunch came in 2007 with an attempt to acquire Dutch banking giant ABN Amro. That absurdly ambitious takeover was one deal too many. The credit crisis which reached a climax the following year pushed RBS to the brink of bankruptcy, and it was saved only by its takeover by the British government. In 2009 it announced a program to sell off many of the assets it acquired over the previous five years and refocus on core activities in the UK. Direct Line insurance, Citizens Bank of the US and other international operations as well as most of its commercial and investment banking operations were divested, but it struggled to find a buyer for a collection of UK bank branches - the so-called Williams & Glyn estate - it had been ordered to sell by EU regulators. They were instead finally closed, and their customers transferred to other banks. A decade after its implosion, RBS remains majority-owned by the British government, with little prospect of an end to that situation before 2024, and combined losses of £58bn by the end of 2016. It reported a modest profit in 2017, its first for nine years, on revenues of £13.1bn. It continues to operate several banking businesses including NatWest in the UK, Royal Bank of Scotland in Scotland and Ulster Bank in Northern Ireland. Other units include a collection of private banks led by Coutts & Co, as well as leasing arm Lombard. Stephen Hester, who had undertaken most of the heavy lifting in RBS's post-2008 turnaround, was replaced as CEO in 2015 by Ross McEwan.
Capsule checked 31st October 2018
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Historical profile information for Royal Bank of Scotland
Adbrands Weekly Update 1st Mar 2018: Royal Bank of Scotland took investors by surprise with its first profit for a decade; it is a "symbolic moment" said CEO Ross McEwan. Though still under state ownership as a result of its virtual collapse in the 2008 crisis, RBS delivered an attributable profit of £752m, despite another round of charges for litigation and misconduct. However more charges may follow during 2018, since the bank has yet to reach a final settlement with the US Department of Justice over mortgage mis-selling. Revenues rose 4% to £13.1bn.
Adbrands Weekly Update 13th Jul 2017: Royal Bank of Scotland is still struggling to draw a line under the fallout from past bad behaviour, and specifically its involvement in mis-selling or underwriting toxic mortgage-backed securities in the run-up to the 2008 financial crisis. This week it agreed to pay another $5.5bn to settle litigation brought by the US Federal Housing Finance Agency. "This settlement is a stark reminder of what happened to this bank before the financial crisis, and the heavy price paid for its pursuit of global ambitions," said RBS CEO Ross McEwan. He admitted to "disappointment that we have to write such a big cheque to see these things through". A separate lawsuit from the US Department of Justice is still unresolved and could result in an even bigger fine, possibly as much as $12bn.
Adbrands Weekly Update 4th May 2017: There were more strong numbers from UK banks, which seem all to have finally turned the corner after years of struggle with impairments, fines and litigation. Like Lloyds last week, Barclays doubled its underlying profits for the first quarter, though the final reported figures were dented by a £658m loss on the sale of Africa subsidiary Absa. Revenues were also up strongly by 16%. Meanwhile Royal Bank of Scotland reported a much higher than expected profit after years of losses. Analysts had been anticipating a £50m net profit, but instead RBS delivered almost £260m, compared to a loss of £960m in the year ago quarter. Topline was up 14%. HSBC also made up for a string of disappointing numbers last year with a 40% jump in revenues and underlying profits that were also well above expectations.
Adbrands Weekly Update 2nd Mar 2017: The pain never ends at long-suffering UK banking group RBS. Final losses for 2016 came in at almost £1bn more than analysts' expectations of £6bn, bringing combined losses since 2008 to a staggering £58bn. The 2016 figure includes £5.9bn of litigation expenses and bad conduct fines as well as £2.1bn of restructuring, and hundreds of millions more for losses on those last few bad assets still to be jettisoned. The current year is likely to take the accumulated total beyond £60bn, as the group tidies up its remaining loose ends, like the Williams & Glyn banking division it was ordered to sell by EU regulators. Following the collapse of yet another attempt to sell the business last month, RBS has petitioned the EU to waive their requirement for disposal in return for increased investment by the bank in entrepreneurial business banking. Yet buried beneath all the bad investments and bad behaviour of the Noughties is a decent core business struggling to break free. Via its NatWest and Royal Bank of Scotland retail units, RBS remains the biggest bank for UK business customers and #2 in personal banking. CEO Ross McEwan dangled before investors the glimmering vision of a return to profitability in 2018. The core banking businesses both reported modest growth in revenues and operating profits, but were undercut by further losses in what remains of the group's corporate and institutional banking division, now renamed NatWest Markets. Group income continued to drift lower, falling to £12.6bn.
Adbrands Weekly Update 8th Dec 2016: Still struggling British bank RBS agreed yet another mammoth payout to resolve past misbehaviour. In this latest settlement it will pay a combined total of £800m to hundreds of RBS shareholders who took part in a £12bn rights issue in April 2008. Yet only a few months later, RBS was forced into state ownership after coming close to collapse, with existing shareholders virtually wiped out. The claimants accuse the bank of making misleading and untrue statements in the rights prospectus regarding its financial stability. Reportedly, senior managers at the time ignored warnings from internal risk assessors over the quality of its investments in subprime mortgage bonds and other such assets. This settlement covers only the larger investors in the rights issue. Groups representing another 27,000 smaller shareholders have not accepted RBS's offer and are still in negotiations. The bank also faces a mammoth fine of as much as $12bn from US regulators for misselling mortgage-backed securities in the run-up to the crash.
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