Royal Bank of Scotland

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Royal Bank of Scotland (RBS) is one of the largest financial services groups in the world.


Financial crisis 2009

In February 2009 it was announced that RBS had suffered the biggest loss in British corporate history - more than £24bn. On 26 February the bank agreed terms with the government to take part in its asset protection scheme, which lets it pass most of the potential losses on its riskier assets on to the taxpayer. It has also raised up to £25.5bn in fresh funding from the UK taxpayer. Concerns that UK taxpayers could end up owning 95 per cent of the bank if its losses continued to mount[1] were assuaged by August 2010 when RBS reported an operating profit of £1.6bn, with the UK taxpayer owning an 84 per cent stake. [2]

History

Founded in 1727, RBS was not only the biggest company in Scotland,[3] but the second largest bank in the UK and Europe after HSBC, ranking sixth in the world. 70% of the top 100 companies in Europe bank with RBS.[4] It is in the top five of all companies listed on the UK stock exchange.

In 2008 RBS bought Dutch bank ABN Amro. In Feb 2009, RBS was forced to admit that the acquisition of ABN Amro helped towards the bank’s near demise, although it could not put a figure on how much RBS will have to write down to cover loses made.

In March 2000, The Royal Bank of Scotland Group completed the largest takeover in British banking history with its hostile acquisition of NatWest in a £21 billion deal, which also cost 18,000 jobs. Its assets at 30 June 2004 totalled £519 billion, its profits over the previous half year up by 17% before tax.[5]

The Group also includes Ulster Bank in Northern Ireland, which also has a strong presence in the Republic of Ireland; Ireland's First Active Plc; Coutts Group, which provides banking to 70,000 wealthy customers in 38 countries; Direct Line, providing insurance and financial services by telephone; Citizens Financial Group, based in Rhode Island (USA), the second largest bank in New England; Churchill, one of the UK's largest providers of insurance products; the asset finance company Lombard; and Style Financial Services Limited, providing retail credit and store cards. In addition to the UK, the Group has offices in Europe, the US, and Asia. It is developing its financial service activities across Europe with Santander Central Hispano of Spain. Tesco Personal Finance, a joint venture between RBS and Tesco, is one of the main supermarket banking brands in the UK.

RBS investments[6]

Friends of the Earth ranks the Royal Bank of Scotland among the least ethical pension scheme providers in Britain, with a score of only 1 out of 15, based on the degree to which ethical, environmental and social considerations were even taken into account, and the mechanisms for customer control and the monitoring of policies in place.[7]

RBS signed up to the Equator Principles, which set certain environmental and social guidelines which any project must meet before they will lend money. However, it is funding the Baku-Ceyhan oil pipeline, which has been shown by Friends of the Earth to break these principles on over 150 counts.[8] The Royal Bank of Scotland financed the pipeline by about $100m. Another bank, Intesa of Italy, has already pulled out of the project due to safety concerns. The Royal Bank of Scotland has ignored all concerns, and seems likely to fund similar projects in future.

The bank's 2003 (most recent) annual report flag-shipped RBS as a major financier of oil services company Petrofac's acquisition plans.[9] Also celebrated were its services to Element Six, an Irish-based company mining diamonds in South Africa, formerly known as De Beers Industrial Diamonds.[10] It is also a major funder of Peel Holdings, which owns Liverpool airport.[11] The Bank is heavily involved in funding the civil aviation industry through its subsidiary RBS Aviation Capital, based in Dublin, which finances at least 98 civilian airlines in 36 countries.

In 2004, RBS initiated the refinancing, together with HBoS, of Abbot Group Plc, an offshore drilling, inspection and drilling support company to the tune of £80.2million.[12]

Natwest, part of the Royal Bank of Scotland Group, financed the Asia Pulp and Paper Company (APP), which was responsible for the destruction of 280,000 hectares of Indonesian rainforest over the space of 10 years. They are also in dispute with indigenous peoples over land rights.[13]

Corporate issues

RBS and racial discrimination

In June 2004 RBS US subsidiary, Citizens, was accused by Fair Finance Watch of racial discrimination in its lending practices. The group alleges that Citizens 'continues to disproportionately exclude and deny African-Americans' and Latinos' applications for mortgage loans'. It cites statistics from a number of US cities, such as Philadelphia, where it claims Citizens rejected 14 out of 15 mortgage applications from African-Americans in 2002. Only 6 out of 15 white applicants in Philadelphia were rejected, it is alleged.[14]

The group Friends of Al-Aqsa (FoAA), a British-Palestinian solidarity organisation had its bank accounts abruptly closed by the Royal Bank of Scotland in January 2005. The group is not under sanction by the government, although an organisation with a similar name is on a Home Office 'watchlist'. The bank has refused to discuss the issue, and merely informed Ismail Patel, chair of the Leicester-based FoAA, that a review had been conducted and the bank was no longer willing to provide him with facilities. He was given 30 days to transfer his personal and business accounts and the FoAA account.[15] Threats of legal action and a mass consumer boycott persuaded the bank to reopen the accounts a few days later.

RBS accounting mismanagement

A report by the US Bankruptcy Court investigating the Enron affair found that 'RBS aided and abetted certain Enron officers in breaching their fiduciary duties', and was aware of Enron's accountancy juggling concerning a power plant in Teesside. The report names four RBS executives, claiming they were among those involved in the deal.[16]

RBS was fined £750,000 in 2002 for breaches of money laundering regulations after it failed to show adequate documentation of customers’ identities for some accounts.[17]

RBS and animal rights

The Royal Bank of Scotland was one of the major financiers of the Huntingdon Life Sciences animal testing centre,[18] but gave up their support when they were informed that their staff and customers could become targeted by the animal rights movement.[19]

People

Board members

  • Sir Philip Hampton, chairman from January 2009. Replaced Sir Tom McKillop who was held responsible for the downfall of RBS in 2008/09.

Executive Directors

Non-Executive Directors

Former Directors

Former People

  • Derek Weir, Managing Director, Corporate & Commercial Banking (to 2007).

PR and lobbying

Internal

In July 2008, The Telegraph wrote:

"Royal Bank of Scotland may be Scotland's national bank, but is it taking its patriotic duties too far? Its communications department is beginning to resemble an outpost of the Scottish National Party. Staff members in the press office include Andrew Wilson, a former Scottish National Party MSP, and Colin Pyle, who used to work for SNP leader and Scottish First Minister Alex Salmond. And in the government relations team is Andrew Henderson, one of Salmond's drivers during the recent election."[24]
  • Roger Lowry, Head of public / government affairs, appointed January 2008. Ex public affairs chief at Ofcom.[25]
  • Andrew McLaughlin, Director, Group Economics and Corporate Affairs.[26] After several years working in academia, McLaughlin was a corporate finance advisor with Ernst and Young before joining the RBS Group. He is a member of the University of Nottingham Globalisation and Economic Policy Advisory Board and a visiting professor at the University of Glasgow. He also sits on the CBI Economic and Tax Affairs Committee.
  • Andrew Wilson, Head of Group Corporate Affairs. Former Scottish National Party MSP.[27][28]

PR and lobbying firms

  • Jefferson Communications, lobbying firm.
  • PHA Media was hired in January 2009 by Sir Fred Goodwin, widely dubbed ‘the world’s worst banker’, to help him cope with the media storm over the losses incurred by RBS in 2008/09.[29]
  • Media House International has been called in by RBS in early 2009 to handle its Scottish PR as it seeks to deal with the media fallout over RBS losses in Scotland, where it employs 22,000 people. RBS will ask Media House to liaise with Scottish media as it seeks to reassure customers, employees and stakeholders north of the border.[30]
  • Lansons Communications conducts PR for RBS Insurance.

Previous contracts

Affiliations

Think tanks and Institutes

Resources

Notes

  1. ↑ Treanor, Jill, "RBS record losses raise prospect of 95% state ownership," Guardian, 26 February 2009, accessed 03 February 2011.
  2. ↑ BBC News, RBS half-year profits hit £1.1bn, 6 August 2010
  3. ↑ Insider, Top 500 Companies, accessed 10 March 2005.
  4. ↑ Deloitte, The Royal Bank of Scotland Group plc, 18 April 2005 Web Archive, accessed 03 February 2011.
  5. ↑ RBS, The Royal Bank of Scotland Group plc Representing 37,000,000 Non-cumulative Dollar Preference Shares, Series M, prospectus supplement to prospectus dated 17 August 2004, accessed 03 February 2011.
  6. ↑ All unreferenced information is from the investors' own websites or from Trustnet, http://www.trustnet.com/.
  7. ↑ FoE, Top 100 UK pension funds - how ethical are they?, Briefing, undated, accessed 03 February 2011.
  8. ↑ FoE, "Tell Royal Bank of Scotland - Put your money where your mouth is," 20 December 2004 Web Archive, accessed 03 February 2011.
  9. ↑ RBS, Annual Reports and Accounts 2003, accessed 03 February 2011.
  10. ↑ Ibid.
  11. ↑ RBS, Done Deals - Banking on success throughout England & Wales, Winter 2003, Vol.3, 14 May 2005 Web Archive, accessed 03 February 2011.
  12. ↑ Insider, Top 500 Companies, accessed 10 March 2005.
  13. ↑ FoE, Finance Initiatives for Sustainable Development, Briefing, undated, accessed 03 February 2011.
  14. ↑ Walsh, Conal, "RBS 'excludes and denies' black Americans," Guardian, 06 June 2004, accessed 03 February 2011.
  15. ↑ Al Yafai, Faisal, "Palestinian aid groups' accounts closed," Guardian, 03 January 2005.
  16. ↑ Stanton, Jim, "RBS chiefs named in Enron court papers," Scotsman, 31 December 2004, accessed 31 March 2005.
  17. ↑ FSA, "FSA fines Royal Bank of Scotland Plc 750,000 for money laundering control failings," 17 December 2002, accessed 03 February 2011.
  18. ↑ Treanor, Jill, Steven Morris and Andrew Clark, "Huntingdon Life: facing collapse in 36 hours," Guardian, 18 January 2001, accessed 03 February 2011.
  19. ↑ White, Michael, "Straw attacks banks that dumped protest firm," Guardian, 13 March 2001, accessed 03 February 2011.
  20. ↑ Wachman, Richard, "Fred the Shred: the irresistible rise and rise of a ruthless charmer," Guardian, 27 July 2003, accessed 03 February 2011.
  21. ↑ Scotsman, "Scotland's most powerful," 27 April 2003, accessed 10 March 2005.
  22. ↑ Scotsman, "Scottish Business Briefing," 26 March 2007, accessed 03 February 2011.
  23. ↑ The Telegraph, "Charles recalls Lamport to oversee his coronation," 25 March 2007.
  24. ↑ Russel, Jonathan, "It's an SNP reunion party at RBS," The Telegraph, 04 July 2008, accessed 03 February 2011.
  25. ↑ Mattinson, Alec, "Bankers' apologies are 'pathetic'," PR Week, 11 February 2009, accessed 03 February 2011.
  26. ↑ PR Week, "Banking industry Insider's Guide: UK banks' reputation managers," 03 October 2008, accessed 03 February 2011.
  27. ↑ PR Week, "Banking industry Insider's Guide: UK banks' reputation managers," 03 October 2008, accessed 03 February 2011.
  28. ↑ Russel, Jonathan, "It's an SNP reunion party at RBS," The Telegraph, 04 July 2008, accessed 03 February 2011.
  29. ↑ O'Reilly, Gemma, "Goodwin/RBS call for advice, PR Week, 28 Jan 2009, accessed 03 February 2011.
  30. ↑ O'Reilly, Gemma, "Goodwin/RBS call for advice, PR Week, 28 Jan 2009, accessed 03 February 2011.
  31. ↑ Financial Times, Freshwater UK Business Profile, accessed 04 April 2008.
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