Everything about Royal Bank Of Scotland Group totally explained
The Royal Bank of Scotland Group Plc is a banking and insurance
holding company in the
United Kingdom based in
Edinburgh,
Scotland. It includes The
Royal Bank of Scotland Plc founded in 1727 by a
Royal Charter of King
George I,
National Westminster Bank Plc in
England and Wales and
Ulster Bank Limited in
Ireland.
The RBS Group is the largest banking group in
Scotland, the second largest in the UK and
Europe, and the fifth largest in the world by
market capitalisation. According to
Forbes Global 2000, it's currently the 13th largest company in the world. Its shares have a primary listing on the
London Stock Exchange. The registered head office of the group and the clearing bank is located at
St Andrew Square. In 2005,
Queen Elizabeth II opened the bank's new head office building in
Gogarburn, Edinburgh.
The RBS Group operates a wide variety of banking brands offering personal and business
banking,
private banking,
insurance and
corporate finance throughout its operations located in Europe,
North America and
Asia. In the UK and
Republic of Ireland the main subsidiary companies are: The Royal Bank of Scotland;
National Westminster Bank;
Ulster Bank;
Drummonds and
Coutts & Co. In the
United States it owns
Citizens Financial Group, the 8th largest bank in the country. Insurance companies include
Churchill Insurance,
Direct Line, Privilege, and
NIG.
The group issues
banknotes in Scotland and Northern Ireland, and Royal Bank of Scotland is the last bank in the UK to print a
£1 note.
Financial data
Financial data in GBP millions >
| Year |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
| Income |
16 815 |
19 229 |
22 754 |
25 902 |
28 002 |
31 115 |
| Profit before tax |
6 451 |
7 151 |
8 101 |
9 763 |
10 864 |
9 900 |
| Net profit |
3 207 |
4 039 |
4 256 |
5 551 |
6 497 |
7 712 |
| Market capitalisation |
43 200 |
48 800 |
55 600 |
56 100 |
62 800 |
N/A |
Sources: OpesC
History
For information on the history of the Royal Bank of Scotland PLC see the Royal Bank of Scotland article
Takeover bids
During the late 1970s and early 1980s the Royal Bank was the subject of three separate takeover approaches. In 1979,
Lloyds Bank, which had previously built up a 16.4% stake in the Bank, made a takeover approach for the remaining shares it didn't own. The offer was rejected by the board of management on the basis it was detrimental to the Bank’s operations. However when the
Standard Chartered Bank, proposed a merger with the Bank in 1980, the board of management responded favourably to the offer. Standard Chartered Bank was headquartered in London, although most of its operations were in the Far East, and the Royal Bank saw advantages in creating a truly international banking group. Approval was received from the
Bank of England, and the two banks agreed a merger plan that would see the Standard Chartered acquire the Royal Bank and keep the UK operations based in Edinburgh. However the bid was scuppered by the
Hongkong and Shanghai Banking Corporation (HSBC) which tabled a rival offer. The bid by HSBC wasn't backed by the Bank of England; and was subsequently rejected by the Royal Bank’s board of management. However the
British government referred both bids to the
Monopolies and Mergers Commission; and both were subsequently rejected as being against the public interest.
The Bank did obtain an international partnership with
Banco Santander Central Hispano of
Spain, each bank taking a 5% stake in the other. However this arrangement ended in 2005, when Banco Santander Central Hispano acquired UK bank,
Abbey National – and both banks sold their respective shareholdings.
International expansion
The first international office of the bank was opened in
New York in 1960. Subsequent international banks were opened in
Chicago,
Los Angeles,
Houston and
Hong Kong. In 1988 the bank acquired
Citizens Financial Group, a bank based in
Rhode Island,
United States. Since then, Citizens has acquired several other American banks, and in 2004 acquired
Charter One Bank to become the 8th largest bank in the United States.
Outwith North America, the Royal Bank also opened offices in Europe and now has subsidiaries in:
Austria,
Switzerland,
France,
Italy,
Germany,
Greece,
Spain,
Portugal,
Denmark,
Norway,
Sweden and
Federation of Bosnia and Herzegovina In the Asia-Pacific region, the bank has offices in:
Australia,
China,
Hong Kong,
Japan and
Singapore.
National Westminster Bank
The late 1990s saw a new wave of consolidation in the financial services sector. In 1999, the Bank of Scotland launched a hostile takeover bid for English rival, the
NatWest. The Bank of Scotland intended to fund the deal by selling off many of the NatWest’s subsidiary companies, including Ulster Bank and Coutts. However, the Royal Bank subsequently tabled a counter-offer, sparking off the largest hostile takeover battle in UK corporate history. A key differentiation from the Bank of Scotland’s bid was the Royal Bank’s plan to retain all of NatWest’s subsidiaries. Although NatWest, one of the "
Big 4" English clearing banks, was significantly larger than both Scottish banks, it had a history of poor financial performance, and plans to merge with insurance company
Legal & General were not well received, prompting a 26% fall in share price.
On
February 11,
2000, the Royal Bank of Scotland was declared the winner in the takeover battle, becoming the second largest banking group in the UK after
HSBC Holdings. NatWest and the Royal Bank of Scotland became subsidiaries of the holding company; The Royal Bank of Scotland Group. NatWest as a distinct banking brand was retained, although many back office functions of the bank were merged with the Royal Bank's leading to over 18,000 job losses throughout the UK.
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Recent history
In
1967, RBS became the first Scottish bank to install an
Automated Teller Machine, and by
1980 the service, known as
Cashline had become the busiest ATM network in the world. Today it's now the largest privately owned ATM network in the UK, it's also a member of the LINK ATM network. In
1997, RBS was the first bank in the world to make its ATMs available to all cardholders. The word
Cashline, in Scotland at least has become a generic term for an ATM.
In August 2004, the bank expanded into China, acquiring a 10% stake in the
Bank of China for £1.7 billion .
A new international headquarters was built at
Gogarburn on the outskirts of Edinburgh, and was opened by
Queen Elizabeth II and
Prince Philip, Duke of Edinburgh in 2005. The St Andrew Square office still remains the official registered head office.
The bank was the 2005 recipient of the
Wharton Infosys Business Transformation Award, an award given to enterprises and individuals who use information technology in a society-transforming way.
The Group acquired Dutch Bank
ABN AMRO as part of a consortium with Belgian bank
Fortis and Spanish bank
Banco Santander on
10 October,
2007. Rivals speculated that RBS had overpaid for the Dutch bank although the bank pointed out that of the £49bn paid for ABN Amro, RBS's share was only £10bn.
Coutts Bank's international businesses were renamed RBS Coutts on
01 January 2008.
2008 Rights Issue
After previous denials following press coverage, on the
22 April,
2008 RBS announced a
rights issue which aimed to raise £12billion in new capital to offset a
writedown of £5.9billion resulting from the bad investments and to shore up its' reserves following the purchase of ABN-Amro. This is the largest rights issue in
British corporate history. The bank also plans to divest some of its' subsidiaries to raise further funds, notably its insurance divisions
Direct Line and
Churchill.
There are fears however that the bank may not receive the full asking price of £7bn and may be forced into seeking more funds from shareholders.
Branding
The RBS Group uses branding developed for the Bank on its merger with the National Commercial Bank of Scotland in 1969. The Group's logo takes the form of an abstract symbol of four inward-pointing arrows known as the "
Daisy Wheel" and is based on an arrangement of 36 piles of coins in a 6 by 6 square They further allege that RBS is “opening the oil and gas frontier” by funding oil and gas extraction in politically and environmentally sensitive regions and entrenching our dependence on oil and gas. This has led to campaigns against this activity. Protests have taken place at some RBS and Natwest branches in the UK, with a number of
student unions threatening to join a boycott against the bank after its 2009 annual general meeting. The
NUS (who banks with Natwest) has also expressed concern over this issue.
Bank of China and Burma
The bank's 10% stake in Bank of China has led to accusations of investing in the Government of
Burma. The Group has defended its position by saying, "Bank of China is a highly respected international financial institution...it sets out its policies in its published accounts and we're happy with these policies and the way in which they're applied."
Banknotes
The group's
pound sterling banknote issues are in wide circulation in Scotland and Northern Ireland. In Scotland,
Royal Bank of Scotland banknotes include the UK's last £1 note. Ulster Bank is one of four issuers of
Northern Ireland banknotes, though, like other private sector banks, it doesn't issue notes in the
Republic of Ireland, where the official currency is the
euro.
Further Information
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