Royal Bank of Scotland
Overview
 
The Royal Bank of Scotland Group is a British banking and insurance holding company
Holding company
A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow...

 in which the UK Government (HM Treasury
HM Treasury
HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy...

) holds an 84% stake. This stake is held and managed through UK Financial Investments Limited
UK Financial Investments Limited
UK Financial Investments Ltd is a company set up in November 2008 by the UK Government to manage its shareholding in banks subscribing to its recapitalisation fund. They include Lloyds Banking Group , Royal Bank of Scotland Group and Northern Rock...

, whose voting rights are limited to 75% in order for the bank to retain its listing on the London Stock Exchange
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...

. The group is based in Edinburgh
Edinburgh
Edinburgh is the capital city of Scotland, the second largest city in Scotland, and the eighth most populous in the United Kingdom. The City of Edinburgh Council governs one of Scotland's 32 local government council areas. The council area includes urban Edinburgh and a rural area...

, Scotland, and is the world's largest company by assets.

The group controls the Royal Bank of Scotland
Royal Bank of Scotland
The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...

 plc, founded in 1727 by a Royal Charter
Royal Charter
A royal charter is a formal document issued by a monarch as letters patent, granting a right or power to an individual or a body corporate. They were, and are still, used to establish significant organizations such as cities or universities. Charters should be distinguished from warrants and...

 of King George I
George I of Great Britain
George I was King of Great Britain and Ireland from 1 August 1714 until his death, and ruler of the Duchy and Electorate of Brunswick-Lüneburg in the Holy Roman Empire from 1698....

, the National Westminster Bank
National Westminster Bank
National Westminster Bank Plc, commonly known as NatWest, is the largest retail and commercial bank in the United Kingdom and has been part of The Royal Bank of Scotland Group Plc since 2000. The Royal Bank of Scotland Group is ranked as the second largest bank in the world by assets...

, which can trace its lineage back to 1650, and Ulster Bank
Ulster Bank
Ulster Bank is a large commercial bank, one of the Big Four in both Northern Ireland and the Republic of Ireland. The Ulster Bank Group is subdivided into two separate legal entities, Ulster Bank Limited and Ulster Bank Ireland Limited...

 in Ireland.

RBS Group is the largest banking group in Scotland, and at its earlier peak was the second largest in the UK and Europe (fifth in stock market value), and the fifth largest in the world by market capitalisation.
Encyclopedia
The Royal Bank of Scotland Group is a British banking and insurance holding company
Holding company
A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow...

 in which the UK Government (HM Treasury
HM Treasury
HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy...

) holds an 84% stake. This stake is held and managed through UK Financial Investments Limited
UK Financial Investments Limited
UK Financial Investments Ltd is a company set up in November 2008 by the UK Government to manage its shareholding in banks subscribing to its recapitalisation fund. They include Lloyds Banking Group , Royal Bank of Scotland Group and Northern Rock...

, whose voting rights are limited to 75% in order for the bank to retain its listing on the London Stock Exchange
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...

. The group is based in Edinburgh
Edinburgh
Edinburgh is the capital city of Scotland, the second largest city in Scotland, and the eighth most populous in the United Kingdom. The City of Edinburgh Council governs one of Scotland's 32 local government council areas. The council area includes urban Edinburgh and a rural area...

, Scotland, and is the world's largest company by assets.

The group controls the Royal Bank of Scotland
Royal Bank of Scotland
The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...

 plc, founded in 1727 by a Royal Charter
Royal Charter
A royal charter is a formal document issued by a monarch as letters patent, granting a right or power to an individual or a body corporate. They were, and are still, used to establish significant organizations such as cities or universities. Charters should be distinguished from warrants and...

 of King George I
George I of Great Britain
George I was King of Great Britain and Ireland from 1 August 1714 until his death, and ruler of the Duchy and Electorate of Brunswick-Lüneburg in the Holy Roman Empire from 1698....

, the National Westminster Bank
National Westminster Bank
National Westminster Bank Plc, commonly known as NatWest, is the largest retail and commercial bank in the United Kingdom and has been part of The Royal Bank of Scotland Group Plc since 2000. The Royal Bank of Scotland Group is ranked as the second largest bank in the world by assets...

, which can trace its lineage back to 1650, and Ulster Bank
Ulster Bank
Ulster Bank is a large commercial bank, one of the Big Four in both Northern Ireland and the Republic of Ireland. The Ulster Bank Group is subdivided into two separate legal entities, Ulster Bank Limited and Ulster Bank Ireland Limited...

 in Ireland.

RBS Group is the largest banking group in Scotland, and at its earlier peak was the second largest in the UK and Europe (fifth in stock market value), and the fifth largest in the world by market capitalisation. According to Forbes Global 2000
Forbes Global 2000
The Forbes Global 2000 is an annual ranking of the top 2000 public companies in the world by Forbes magazine. The ranking is based on a mix of four metrics: sales, profit, assets and market value...

, it was the tenth largest company in the world. Its shares have a primary listing on the London Stock Exchange
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...

. The registered head office of the group and the UK clearing bank are located at St Andrew Square, Edinburgh. 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
Private banking
Private banking is banking, investment and other financial services provided by banks to private individuals investing sizable assets. The term "private" refers to the customer service being rendered on a more personal basis than in mass-market retail banking, usually via dedicated bank advisers...

, insurance and corporate finance
Corporate finance
Corporate finance is the area of finance dealing with monetary decisions that business enterprises make and the tools and analysis used to make these decisions. The primary goal of corporate finance is to maximize shareholder value while managing the firm's financial risks...

 throughout its operations located in Europe, North America and Asia. In the UK and Republic of Ireland
Republic of Ireland
Ireland , described as the Republic of Ireland , is a sovereign state in Europe occupying approximately five-sixths of the island of the same name. Its capital is Dublin. Ireland, which had a population of 4.58 million in 2011, is a constitutional republic governed as a parliamentary democracy,...

, the main subsidiary companies are: The Royal Bank of Scotland; National Westminster Bank
National Westminster Bank
National Westminster Bank Plc, commonly known as NatWest, is the largest retail and commercial bank in the United Kingdom and has been part of The Royal Bank of Scotland Group Plc since 2000. The Royal Bank of Scotland Group is ranked as the second largest bank in the world by assets...

; Ulster Bank
Ulster Bank
Ulster Bank is a large commercial bank, one of the Big Four in both Northern Ireland and the Republic of Ireland. The Ulster Bank Group is subdivided into two separate legal entities, Ulster Bank Limited and Ulster Bank Ireland Limited...

; Drummonds
Drummonds Bank
Messrs. Drummond is an English private banking house founded in 1717 by goldsmith Andrew Drummond . Drummonds Bank was owned by the Drummond family until 1924, when it was taken over by the Royal Bank of Scotland in its first acquisition south of the border.The bank offers a variety of services to...

; and Coutts & Co. In the United States, it owns Citizens Financial Group
Citizens Financial Group
Citizens Financial Group, Inc. is an American bank headquartered in Providence, Rhode Island, which operates in the states of Connecticut, Delaware, Illinois, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Vermont. Citizens is a wholly owned...

, the 8th largest bank in the country. From 2004 to 2009 it was the second largest shareholder in the Bank of China
Bank of China
Bank of China Limited is one of the big four state-owned commercial banks of the People's Republic of China. It was founded in 1912 by the Government of the Republic of China, to replace the Government Bank of Imperial China. It is the oldest bank in China...

, itself the world's fifth largest bank by market capitalisation in February 2008. Insurance companies include Churchill Insurance, Direct Line
Direct Line
Direct Line is part of the RBS Insurance division of the Royal Bank of Scotland Group that specialises in selling insurance and other financial services over the phone and internet....

, Privilege, and NIG.

The group issues banknotes in Scotland and Northern Ireland and, as of 2008, Royal Bank of Scotland is the only bank in the UK still to print a £1
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...

 note.

History

By 1969 economic conditions were becoming more difficult for the banking sector. In response, the National Commercial Bank of Scotland
National Commercial Bank of Scotland
The National Commercial Bank of Scotland Ltd. was a Scottish commercial bank. It was established in 1959 through a merger of the National Bank of Scotland with the Commercial Bank of Scotland . Ten years later it merged with the Royal Bank of Scotland, to become the largest clearing bank in Scotland...

 merged with the Royal Bank of Scotland. The resulting company had 662 branches. The merger resulted in a new holding company
Holding company
A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow...

, National and Commercial Banking Group Ltd. The English and Welsh branches were reorganised, until 1985, as Williams & Glyn's Bank
Williams & Glyn's Bank
Williams & Glyn's Bank Limited was established in London in 1970, when the Royal Bank of Scotland merged its two subsidiaries in England and Wales, Williams Deacon's Bank Ltd. and Glyn, Mills & Co...

, while the Scottish branches all transferred to the Royal Bank name. The holding company was renamed Royal Bank of Scotland Group in 1979.

Takeover bids

During the late 1970s and early 1980s the Royal Bank was the subject of three separate takeover approaches. In 1979, Lloyds Bank
Lloyds Bank
Lloyds Bank Plc was a British retail bank which operated in England and Wales from 1765 until its merger into Lloyds TSB in 1995; it remains a registered company but is currently dormant. It expanded during the nineteenth and twentieth centuries and took over a number of smaller banking companies...

, which had previously built up a 16.4% stake in the Royal Bank, made a takeover approach for the remaining shares it did not 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
Standard Chartered Bank
Standard Chartered PLC is a multinational financial services company headquartered in London, United Kingdom with operations in more than seventy countries...

 proposed a merger with the Royal 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
Bank of England
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...

, 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
Hongkong and Shanghai Banking Corporation
The Hongkong and Shanghai Banking Corporation Limited is a prominent bank established and based in Hong Kong since 1865 when Hong Kong was a colony of the British Empire. It is the founding member of the HSBC Group and since 1990 is now a wholly owned subsidiary of HSBC Holdings plc...

 (HSBC) which tabled a rival offer. The bid by HSBC was not 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; 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
Abbey National
Abbey National plc was a UK-based bank and former building society, which latterly traded under the Abbey brand name. It became a wholly owned subsidiary of Grupo Santander of Spain in 2004, and was rebranded as Santander in January 2010, forming Santander UK along with the savings business of the...

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
Citizens Financial Group
Citizens Financial Group, Inc. is an American bank headquartered in Providence, Rhode Island, which operates in the states of Connecticut, Delaware, Illinois, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Vermont. Citizens is a wholly owned...

, a bank based in Rhode Island
Rhode Island
The state of Rhode Island and Providence Plantations, more commonly referred to as Rhode Island , is a state in the New England region of the United States. It is the smallest U.S. state by area...

, 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.

The Royal Bank also opened offices in Europe and now has subsidiaries in: Austria, Switzerland, France, Italy, Germany, Greece, Spain, Portugal, Denmark, Norway, Sweden, Romania
Romania
Romania is a country located at the crossroads of Central and Southeastern Europe, on the Lower Danube, within and outside the Carpathian arch, bordering on the Black Sea...

 and the Federation of Bosnia and Herzegovina
Federation of Bosnia and Herzegovina
The Federation of Bosnia and Herzegovina is one of the two political entities that compose the sovereign country of Bosnia and Herzegovina . The two entities are delineated by the Inter-Entity Boundary Line...

. In the Asia-Pacific region, the bank has offices in: Australia, China, Hong Kong, India, Japan and Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...

.

National Westminster Bank

The late 1990s saw a new wave of consolidation in the financial services sector. In 1999, the Bank of Scotland
Bank of Scotland
The Bank of Scotland plc is a commercial and clearing bank based in Edinburgh, Scotland. With a history dating to the 17th century, it is the second oldest surviving bank in what is now the United Kingdom, and is the only commercial institution created by the Parliament of Scotland to...

 launched a hostile takeover bid for English rival 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
Big Four (banks)
Big Four is the colloquial name for the four main banks in several countries, where the banking industry is dominated by just four institutions and where the phrase has gained currency.-Australia:...

" English clearing banks, was significantly larger than either Scottish bank, it had a recent history of poor financial performance and plans to merge with insurance company Legal & General
Legal & General
Legal & General Group Plc , commonly known as Legal & General, is a multinational financial services company headquartered in London, United Kingdom. Its products include life insurance, general insurance, pensions and investments. It has operations in the United Kingdom, Egypt, France, Germany,...

 were not well received, prompting a 26% fall in share price.

On 11 February 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
HSBC
HSBC Holdings plc is a global banking and financial services company headquartered in Canary Wharf, London, United Kingdom. it is the world's second-largest banking and financial services group and second-largest public company according to a composite measure by Forbes magazine...

. 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.

Further expansion

In 1967, RBS became the first Scottish bank to install an Automated Teller Machine
Automated teller machine
An automated teller machine or automatic teller machine, also known as a Cashpoint , cash machine or sometimes a hole in the wall in British English, is a computerised telecommunications device that provides the clients of a financial institution with access to financial transactions in a public...

, and by 1980 the service, known as Cashline
Cashline
Cashline is the name of the Automated Teller Machine network run by the Royal Bank of Scotland. Its beginnings date back to 1967 when the Royal Bank installed its first ATM in its offices in the West End of Edinburgh...

 had become the busiest ATM network in the world. Today it is now the largest privately owned ATM network in the UK, it is 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 2005, the bank expanded into China, acquiring a 10% stake in the Bank of China
Bank of China
Bank of China Limited is one of the big four state-owned commercial banks of the People's Republic of China. It was founded in 1912 by the Government of the Republic of China, to replace the Government Bank of Imperial China. It is the oldest bank in 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
Prince Philip, Duke of Edinburgh
Prince Philip, Duke of Edinburgh is the husband of Elizabeth II. He is the United Kingdom's longest-serving consort and the oldest serving spouse of a reigning British monarch....

 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 was part of a consortium with Belgian bank Fortis
Fortis (finance)
Fortis N.V./S.A. was a company active in insurance, banking and investment management. In 2007 it was the 20th largest business in the world by revenue but after encountering severe problems in the financial crisis of 2008, most of the company was sold in parts, with only insurance activities...

 and Spanish bank Banco Santander that acquired Dutch Bank ABN AMRO
ABN AMRO
ABN AMRO Bank N.V. is a Dutch state-owned bank with headquarters in Amsterdam. It was re-established, in its current form, in 2009 following the acquisition and break up of ABN AMRO Group by a banking consortium consisting of Royal Bank of Scotland Group, Santander and Fortis...

 a 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 (equivalent to £167 per citizen of the UK).

Coutts
Coutts
Coutts & Co. is one of the UK's private banking houses, now wholly owned by the Royal Bank of Scotland . RBS acquired Coutts and all of its overseas subsidiaries when it bought NatWest. On 1 January 2008, Coutts' international businesses were renamed RBS Coutts, aligning them more closely with...

 Bank's international businesses were renamed RBS Coutts on 1 January 2008.

2008–2009 financial crisis

After previous denials following press coverage, on the 22 April 2008 RBS announced a rights issue
Rights issue
A rights issue is an issue of additional shares by a company to raise capital under a seasoned equity offering. The rights issue is a special form of shelf offering or shelf registration. With the issued rights, existing shareholders have the privilege to buy a specified number of new shares from...

 which aimed to raise £12bn in new capital to offset a writedown of £5.9bn resulting from credit market positions and to shore up its reserves following the purchase of ABN AMRO
ABN AMRO
ABN AMRO Bank N.V. is a Dutch state-owned bank with headquarters in Amsterdam. It was re-established, in its current form, in 2009 following the acquisition and break up of ABN AMRO Group by a banking consortium consisting of Royal Bank of Scotland Group, Santander and Fortis...

. This was, at the time, the largest rights issue in British corporate history. The bank also announced that it would review the possibility of divesting some of its subsidiaries to raise further funds, notably its insurance divisions Direct Line
Direct Line
Direct Line is part of the RBS Insurance division of the Royal Bank of Scotland Group that specialises in selling insurance and other financial services over the phone and internet....

 and Churchill. Churchill and Direct Line currently remain as part of RBS Group.

On 13 October 2008, in a move aimed at recapitalising the bank, it was announced that the British Government would take a stake of up to 58% in the Group. The aim was to "make available new tier 1 capital to UK banks and building societies to strengthen their resources permitting them to restructure their finances, while maintaining their support for the real economy, through the recapitalisation scheme which has been made available to eligible institutions". A rights issue to existing shareholders having failed to secure more than minimal take-up, the government subsequently found itself owning more than 57% of the bank's equity share capital.

The Treasury
HM Treasury
HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy...

 would infuse £37bn ($64bn, €47bn, equivalent to £617 per citizen of the UK) of new capital into Royal Bank of Scotland Group plc, Lloyds TSB
Lloyds TSB
Lloyds TSB Bank Plc is a retail bank in the United Kingdom. It was established in 1995 by the merger of Lloyds Bank, established in Birmingham, England in 1765 and traditionally considered one of the Big Four clearing banks, with the TSB Group which traces its origins to 1810...

 and HBOS
HBOS
HBOS plc is a banking and insurance company in the United Kingdom, a wholly owned subsidiary of the Lloyds Banking Group having been taken over in January 2009...

 plc, to avert financial sector collapse. The government stressed, however, that it was not "standard public ownership" and that the banks would return to private investors "at the right time.".

Chancellor of the Exchequer
Chancellor of the Exchequer
The Chancellor of the Exchequer is the title held by the British Cabinet minister who is responsible for all economic and financial matters. Often simply called the Chancellor, the office-holder controls HM Treasury and plays a role akin to the posts of Minister of Finance or Secretary of the...

 Alistair Darling
Alistair Darling
Alistair Maclean Darling is a Scottish Labour Party politician who has been a Member of Parliament since 1987, currently for Edinburgh South West. He served as the Chancellor of the Exchequer from 2007 to 2010...

 stated UK taxpayers would benefit from the government's rescue plan, as it will have some control over RBS in exchange for £5bn in preference shares and underwriting the issuance of a further £15bn in ordinary shares. If shareholder take-up of the share issue was 0% then total government ownership in RBS would be 58% and if shareholder take-up was 100% then total government ownership in RBS would be 0%. In the event, less than 56 million new shares were taken up by investors, or 0.24pc of the total offered by RBS in October 2008.

As a consequence of this rescue the Chief Executive of the group Sir Fred Goodwin
Fred Goodwin
Sir Frederick Anderson Goodwin CA, FCIBS is a Scottish chartered accountant and former banker who was chief executive of the Royal Bank of Scotland Group between 2001 and 2009....

 offered his resignation
Resignation
A resignation is the formal act of giving up or quitting one's office or position. It can also refer to the act of admitting defeat in a game like chess, indicated by the resigning player declaring "I resign", turning his king on its side, extending his hand, or stopping the chess clock...

 which was duly accepted. Chairman Sir Tom McKillop
Tom McKillop
Sir Thomas Fulton Wilson McKillop, born 19 March 1943, is a chemist, pharmaceutical company CEO and former chairman of RBS Group.McKillop was born in Dreghorn, a small village near the town of Irvine in Ayrshire, Scotland and educated at Irvine Royal Academy and then Glasgow University, where he...

 confirmed he would stand down from that role when his contract expires in March 2009. Goodwin was replaced by Stephen Hester
Stephen Hester
Stephen Hester , is currently the Chief Executive Officer of The Royal Bank of Scotland Group.-Early life:Hester is the eldest son of a university professor...

, previously Chief Executive of British Land
British Land
The British Land Company plc is one of the largest property development and investment companies in the United Kingdom. The firm switched to Real Estate Investment Trust status when REITs were introduced in the United Kingdom in January 2007. It is headquartered in London...

, who took over at the Royal Bank of Scotland in November, 2008.

On the 19 January 2009 the British Government announced a further injection of funds into the UK banking system in an attempt to restart personal and business lending. This would involve the creation of a state-backed insurance scheme which would allow banks to insure against existing loans going into default, in an attempt to restore the banks' confidence.

At the same time the government announced its intention to convert the preference shares in RBS that it had acquired in October 2008 to ordinary shares. This would remove the 12% coupon payment (£600m p.a) on the shares but would increase the state's holding in the bank from 58% to 70%.

On the same day RBS released a trading statement in which it expected to post full-year trading losses (before writedowns) of between £7bn and £8bn. The group also announced writedowns on goodwill
Goodwill (accounting)
Goodwill is an accounting concept meaning the value of an entity over and above the value of its assets. The term was originally used in accounting to express the intangible but quantifiable "prudent value" of an ongoing business beyond its assets, resulting perhaps because the reputation the firm...

s (primarily related to the takeover
Takeover
In business, a takeover is the purchase of one company by another . In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition of a private company.- Friendly takeovers :Before a bidder makes an offer for another...

 of Dutch
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...

 bank ABN-AMRO) of around £20bn. The combined total of £28bn would be the biggest ever annual loss in UK corporate history (the actual figure was £24.1bn). As a result the group's share price fell over 66% in one day to 10.9p per share, from a 52-week high of 354p per share, itself a drop of 97%. Some commentators called this the Blue Monday Crash
Blue Monday Crash 2009
On Monday, 19 January 2009, a date previously known as Blue Monday, British banking shares collapsed in a rout of selling after Royal Bank of Scotland announced the biggest corporate losses in British history. The shares fell over 67% in a single day. Shares in all other British banks suffered...

.

Recent developments

In June 2008 RBS sold the subsidiary Angel Trains
Angel Trains
Angel Trains is an English Rolling Stock Operating Company created in 1994 as part of the privatisation of British Rail. It was one of three ROSCOs...

 for £3.6bn as part of a £10bn assets sale to raise cash.

RBS' contractual commitment to retain the 4.26% Bank of China
Bank of China
Bank of China Limited is one of the big four state-owned commercial banks of the People's Republic of China. It was founded in 1912 by the Government of the Republic of China, to replace the Government Bank of Imperial China. It is the oldest bank in China...

 (BoC) stake ended on 31 December 2008, and the shares were sold on 14 January 2009. Exchange rate fluctuations meant that RBS made no profit on the deal. The Scottish press suggested two reasons for the move: the need for a bank mainly owned by HM Treasury
HM Treasury
HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy...

 to focus scarce capital
Financial capital
Financial capital can refer to money used by entrepreneurs and businesses to buy what they need to make their products or provide their services or to that sector of the economy based on its operation, i.e. retail, corporate, investment banking, etc....

 on British markets, and the growth possibility of RBS's own China operations. However, Chinese sources noted that BoC had been unhappy with RBS' continued expansion of mainland
Mainland China
Mainland China, the Chinese mainland or simply the mainland, is a geopolitical term that refers to the area under the jurisdiction of the People's Republic of China . According to the Taipei-based Mainland Affairs Council, the term excludes the PRC Special Administrative Regions of Hong Kong and...

 operations rivalling BoC in the highly profitable wealth management
Wealth management
Wealth management is an investment advisory discipline that incorporates financial planning, investment portfolio management and a number of aggregated financial services...

 sector.

In March 2009, RBS announced the closure of its tax avoidance
Tax avoidance
Tax avoidance is the legal utilization of the tax regime to one's own advantage, to reduce the amount of tax that is payable by means that are within the law. The term tax mitigation is a synonym for tax avoidance. Its original use was by tax advisors as an alternative to the pejorative term tax...

 department, which had helped it avoid £500m of tax by channelling billions of pounds through securitized
Securitization
Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations and selling said consolidated debt as bonds, pass-through securities, or Collateralized mortgage obligation , to...

 assets in tax haven
Tax haven
A tax haven is a state or a country or territory where certain taxes are levied at a low rate or not at all while offering due process, good governance and a low corruption rate....

s such as the Cayman Islands
Cayman Islands
The Cayman Islands is a British Overseas Territory and overseas territory of the European Union located in the western Caribbean Sea. The territory comprises the three islands of Grand Cayman, Cayman Brac, and Little Cayman, located south of Cuba and northwest of Jamaica...

. The closure was partly due to a lack of funds to continue the measures, and partly due to the 84% taxpayer stake in the bank.

Also in March 2009, RBS revealed that its traders had been involved in the purchase and sale of sub-prime securities under the supervision of Sir Fred Goodwin.

In September 2009, RBS and Natwest announced dramatic cuts in their overdraft fees including the unpaid item fee (from £38 to £5), the card misuse fee (from £35 to £15) and the monthly maintenance charge for going overdrawn without consent (from £28 to £20). The cuts came at a time when the row over the legality of unauthorised borrowing reached the House of Lords
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....

. The fees were estimated to earn current account providers about £2.6bn a year. The Consumers' Association
Consumers' Association
The Consumers' Association is the umbrella organisation that houses the trading arm Which? Ltd. The Consumers' Association is a charity, registered in England and Wales No 296072. Which? Ltd is its wholly owned trading subsidiary....

 chief executive, Peter Vicary-Smith, said: "This is a step in the right direction and a victory for consumer pressure."

The Group has agreed to sell off their English and Welsh RBS branded branches and the Scottish branches of Natwest to Santander, following conditions set by the European Union and the British Government regarding state support.
The insurance division is also set to be put up for sale, or as a separate company through an initial public offering
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...

. It had been reported in late October 2008 that the insurance company Swiss Re
Swiss Re
Swiss Reinsurance Company Ltd , generally known as Swiss Re, is a Swiss reinsurance company. It is the world’s second-largest reinsurer, after having acquired GE Insurance Solutions. The company has its headquarters in Zurich...

 and venture-capital firm CVC Capital Partners
CVC Capital Partners
CVC Capital Partners is one of the top five largest private equity firms globally with approximately US$46 billion in funds focused on management buyouts...

 were to purchase the Group's insurance division for £6 billion, however the bank refused to provide funding to the buyer which had been required within the deal.

In November 2009, RBS announced plans to cut 3,700 jobs in addition to 16,000 already planned, while the government increased its stake in the company from 70% to 84%.

In December 2009, the RBS board revolted against the main shareholder, the British government. They threatened to resign unless they were permitted to pay bonuses of £1.5bn to staff in its investment arm. The warning was very heavily criticised because it came in the wake of a £850bn bailout of the banking sector.

On March 29, 2010, GE Capital
GE Capital
GE Capital is the financial services unit of General Electric, one of five major units. Its various divisions include GE Capital Aviation Services, GE Capital Real Estate, GE Energy Financial Services and GE Money....

 acquired Royal Bank of Scotland’s factoring business in Germany. GE Capital signed an agreement with the Royal Bank of Scotland plc (RBS) to acquire 100% of RBS Factoring GmbH, RBS’s factoring and invoice financing business in Germany, for an undisclosed amount. The transaction is subject to a number of conditions, including regulatory approval.

Branding

The RBS Group uses branding developed for the Bank on its merger with the National Commercial Bank of Scotland
National Commercial Bank of Scotland
The National Commercial Bank of Scotland Ltd. was a Scottish commercial bank. It was established in 1959 through a merger of the National Bank of Scotland with the Commercial Bank of Scotland . Ten years later it merged with the Royal Bank of Scotland, to become the largest clearing bank in 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, representing "the accumulation and concentration of wealth by the Group".

Group structure

The RBS Group is split into six main operating divisions, each with several subsidiary businesses, and it also has a number of support functions.

UK Retail

The UK Personal division comprises retail banking, business banking (turnover under £1m/year), and wealth management services. For UK Retail, services are offered under both the NatWest and Royal Bank of Scotland brand names. Key subsidiaries include:
  • National Westminster Bank
    National Westminster Bank
    National Westminster Bank Plc, commonly known as NatWest, is the largest retail and commercial bank in the United Kingdom and has been part of The Royal Bank of Scotland Group Plc since 2000. The Royal Bank of Scotland Group is ranked as the second largest bank in the world by assets...

  • Royal Bank of Scotland
    Royal Bank of Scotland
    The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...

  • Adam and Company
    Adam and Company
    Adam and Company Plc is a private banking house based in the United Kingdom, part of the Royal Bank of Scotland Group. It offers a range of private banking services including investment management and advisory services to customers in the UK and overseas....

  • Child & Co
    Child & Co
    Child & Co. is a private banking house in the United Kingdom, part of the Royal Bank of Scotland Group. It is based at 1 Fleet Street in the City of London....

  • Drummonds Bank
    Drummonds Bank
    Messrs. Drummond is an English private banking house founded in 1717 by goldsmith Andrew Drummond . Drummonds Bank was owned by the Drummond family until 1924, when it was taken over by the Royal Bank of Scotland in its first acquisition south of the border.The bank offers a variety of services to...

  • Coutts & Co
  • RBS Coutts
  • RBS International

UK Corporate

This division serves UK corporate and commercial customers, from SMEs to UK based multi nationals, and is the largest provider of banking, finance and risk management services to UK corporate and commercial customers. A key subsidiary of UK Corporate is Global Transaction Services, one of the world's top 5 payment businesses, providing cash and liquidity management, trade and supply chain finance, merchant acquiring and commercial card products and services.

RBS Insurance

RBS Insurance division is made up of several well-known brands including Direct Line, Churchill and Privilege. It sells and underwrites personal lines and SME insurance over the telephone and online, as well as through brokers, RBS Group bank branches, and partnerships. RBS Insurance is known as Britain's number one motor insurer trading under the Direct line and Churchill Brands. Key brands include:
  • Churchill Insurance
    Churchill (insurance)
    Churchill is a UK insurance company based in Bromley, London. Founded in 1989 as one of the country’s first direct car insurance companies, the company has expanded to offer a range of general insurance products...

    , which also underwrites the Lloyds TSB
    Lloyds TSB
    Lloyds TSB Bank Plc is a retail bank in the United Kingdom. It was established in 1995 by the merger of Lloyds Bank, established in Birmingham, England in 1765 and traditionally considered one of the Big Four clearing banks, with the TSB Group which traces its origins to 1810...

    , Prudential
    Prudential plc
    Prudential plc is a multinational financial services company headquartered in London, United Kingdom.Prudential's largest division is Prudential Corporation Asia, which has over 15 million customers across 13 Asian markets and is a top-three provider of life insurance in mainland China, Hong...

    , Pearl and Alliance & Leicester
    Alliance & Leicester
    Alliance & Leicester was a former UK-based bank and PLC, which in later years operated as a trading name of Santander UK before being rebranded as Santander. Alliance & Leicester was legally acquired in May 2010 by Santander UK, and was fully incorporated by 2011...

     car insurance brands.
  • Direct Line
    Direct Line
    Direct Line is part of the RBS Insurance division of the Royal Bank of Scotland Group that specialises in selling insurance and other financial services over the phone and internet....

     and Direct Line for Business
  • Devitt Insurance
  • Green Flag
    Green Flag
    Green Flag is a roadside rescue company based in the UK. It was formed in 1971 as the National Breakdown Recovery Club and operated under this name under the ownership of National Car Parks until 1994, when it was renamed Green Flag as a symbolic brand name...

  • NIG
  • Privilege
    Privilege (insurance company)
    Privilege is a division of the Royal Bank of Scotland Group that specialises in selling insurance over the phone and internet. The company's slogan is You don't have to be posh to be Privileged....

  • UKI Partnerships
    UKI Partnerships
    UKI Partnerships is a partnership company and underwriters owned by the Royal Bank of Scotland Group it underwrites and administers policies for several different general insurance brands such as:...

     which underwrites the: Tesco
    Tesco Personal Finance
    Tesco Bank is the trading name of Tesco Personal Finance plc, a telephone and internet based commercial bank in the United Kingdom owned by Tesco, the UK's largest supermarket. Until 2008 it was a 50:50 joint venture between Tesco and the Royal Bank of Scotland, one of the UK's largest banks and...

    , Egg, Mint, Mini
    MINI (BMW)
    Mini is a British automotive marque owned by BMW which specialises in small cars.Mini originated as a specific vehicle, a small car originally known as the Morris Mini-Minor and the Austin Seven, launched by the British Motor Corporation in 1959, and developed into a brand encompassing a range of...

    , BMW
    BMW
    Bayerische Motoren Werke AG is a German automobile, motorcycle and engine manufacturing company founded in 1916. It also owns and produces the Mini marque, and is the parent company of Rolls-Royce Motor Cars. BMW produces motorcycles under BMW Motorrad and Husqvarna brands...

    , Peugeot
    Peugeot
    Peugeot is a major French car brand, part of PSA Peugeot Citroën, the second largest carmaker based in Europe.The family business that precedes the current Peugeot company was founded in 1810, and manufactured coffee mills and bicycles. On 20 November 1858, Emile Peugeot applied for the lion...

    , Suzuki
    Suzuki
    is a Japanese multinational corporation headquartered in Hamamatsu, Japan that specializes in manufacturing compact automobiles and 4x4 vehicles, a full range of motorcycles, all-terrain vehicles , outboard marine engines, wheelchairs and a variety of other small internal combustion engines...

    , Vauxhall
    Vauxhall Motors
    Vauxhall Motors is a British automotive company owned by General Motors and headquartered in Luton. It was founded in 1857 as a pump and marine engine manufacturer, began manufacturing cars in 1903 and was acquired by GM in 1925. It has been the second-largest selling car brand in the UK for...

    , MBNA
    MBNA
    MBNA Corporation was a bank holding company and parent company of wholly owned subsidiary MBNA America Bank, N.A., headquartered in Wilmington, Delaware, prior to being acquired by Bank of America in 2006...

    , NatWest, Royal Bank of Scotland
    Royal Bank of Scotland
    The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...

    , Ulster Bank
    Ulster Bank
    Ulster Bank is a large commercial bank, one of the Big Four in both Northern Ireland and the Republic of Ireland. The Ulster Bank Group is subdivided into two separate legal entities, Ulster Bank Limited and Ulster Bank Ireland Limited...

     and The One Account
    The One account
    The One account Ltd is single-brand subsidiary financial services company offering offset and flexible mortgages in the UK. The company pioneered the offset mortgage in the UK and; was conceived as a joint venture between Virgin Direct and The Royal Bank of Scotland in 1997.Initially, the company...

     insurance brands.
  • Tracker
    Tracker
    Trackers are a class of music sequencer software used to create and edit module files; they allow the user to arrange notes stepwise on a timeline across several monophonic channels....

    , the UK’s number one supplier of vehicle tracking services.

US Retail & Commercial

RBS Group financial products and services are distributed through the Citizens Financial Group
Citizens Financial Group
Citizens Financial Group, Inc. is an American bank headquartered in Providence, Rhode Island, which operates in the states of Connecticut, Delaware, Illinois, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Vermont. Citizens is a wholly owned...

, which includes Charter One Bank, brands across the USA. Citizens is the 20th largest banking group in the United States and is headed by Ellen Alemany
Ellen Alemany
Ellen Alemany is CEO, and chairman of Citizens Financial Group, a division of Royal Bank of Scotland Group. Alemany is presently the only female CEO of a division of a nationalized UK bank.-Biography:...

.

EMEA Retail & Commercial

RBS Group financial products and services are distributed through the Ulster Bank
Ulster Bank
Ulster Bank is a large commercial bank, one of the Big Four in both Northern Ireland and the Republic of Ireland. The Ulster Bank Group is subdivided into two separate legal entities, Ulster Bank Limited and Ulster Bank Ireland Limited...

 brand across Ireland, and through the Royal Bank of Scotland
Royal Bank of Scotland
The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...

 brand in Europe and the Middle East, where a particularly strong presence is held in Romania
Romania
Romania is a country located at the crossroads of Central and Southeastern Europe, on the Lower Danube, within and outside the Carpathian arch, bordering on the Black Sea...

, the UAE and Kazakhstan
Kazakhstan
Kazakhstan , officially the Republic of Kazakhstan, is a transcontinental country in Central Asia and Eastern Europe. Ranked as the ninth largest country in the world, it is also the world's largest landlocked country; its territory of is greater than Western Europe...


Global Banking & Markets

This division, commonly referred to as the investment bank arm of the RBS Group, provides banking services and integrated financial solutions to major corporations and financial institutions around the world. GBM's areas of strength are debt and equity financing, risk management, investment and advisory services, and it also works closely with Global Transaction Services to offer clients extensive capabilities in transaction banking.

Support functions

Sometimes referred to as the 'invisible division', Business Services provides many essential services to the Group alongside Human Resources. Business Services provides a diverse range of services to the customer-facing operations of the Group and comprises:
  • Group Operations, which shapes and executes service delivery for customers
  • Technology Services, which designs, builds, implements and supports global technology related services for the Group
  • Group Property, which provides support, guidance, and day-to-day property services and advice to all divisions, globally, on property related matters
  • Security & Risk, which provides support and advice to protect the business, information and people against key security and fraud threats
  • Group Sourcing & Vendor Management, the RBS Group's procurement function


Several other group support functions also exist, covering: finance, risk, strategy, HR, restructuring, legal and communications.

Subprime mortgage crisis

The group has been adversely affected by the subprime mortgage crisis
Subprime mortgage crisis
The U.S. subprime mortgage crisis was one of the first indicators of the late-2000s financial crisis, characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages....

 and the fair value adjustments of its assets. It has been supported by the government of the United Kingdom
Government of the United Kingdom
Her Majesty's Government is the central government of the United Kingdom of Great Britain and Northern Ireland. The Government is led by the Prime Minister, who selects all the remaining Ministers...

; HM Treasury
HM Treasury
HM Treasury, in full Her Majesty's Treasury, informally The Treasury, is the United Kingdom government department responsible for developing and executing the British government's public finance policy and economic policy...

 now owns a majority of its shares on the London Stock Exchange
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...

.

Media commentary and criticism

During Goodwin's tenure as CEO he attracted some criticism for lavish spending, including on the construction of a £350m headquarters in Edinburgh opened by the Queen in 2005 and $500m headquarters in the US begun in 2006, and the use of a Dassault Falcon 900 jet owned by leasing
Leasing
Leasing is a process by which a firm can obtain the use of a certain fixed assets for which it must pay a series of contractual, periodic, tax deductible payments....

 subsidiary Lombard for occasional corporate travel. Revelations that RBS had spent £200m on celebrity endorsements also went down badly.

In February 2009 RBS reported that while Sir Fred was at the helm it had posted a loss of £24.1bn, the biggest loss in UK corporate history. His responsibility for the expansion of RBS, which led to the losses, has drawn widespread criticism. His image was not enhanced by the news that emerged in questioning by the Treasury Select Committee of the House of Commons on 10 February 2009, that Goodwin has no technical bank training, and has no formal banking qualifications.

In January 2009 The Guardian
The Guardian
The Guardian, formerly known as The Manchester Guardian , is a British national daily newspaper in the Berliner format...

s City editor Julia Finch identified him as one of twenty-five people who were at the heart of the financial meltdown. Nick Cohen
Nick Cohen
Nick Cohen is a British journalist, author and political commentator. He is currently a columnist for The Observer, a blogger for The Spectator and TV critic for Standpoint magazine. He formerly wrote for the London Evening Standard and the New Statesman...

 described Goodwin in The Guardian
The Guardian
The Guardian, formerly known as The Manchester Guardian , is a British national daily newspaper in the Berliner format...

 as "the characteristic villain of our day", who made £20m from RBS and left the taxpayer "with an unlimited liability for the cost of cleaning up the mess". An online column by Daniel Gross labelled Goodwin "The World's Worst Banker", a phrase echoed elsewhere in the media. Gordon Prentice
Gordon Prentice
Gordon Prentice is a British Labour Party politician who was the Member of Parliament for Pendle in Lancashire from 1992 to 2010.-Early life:...

 MP argued that his knighthood should be revoked as it is "wholly inappropriate and anomalous for someone to retain such a reward in these circumstances."

Other members have also frequently been criticised as "fat cats
Fat cat (term)
Fat cat is a political term originally describing a rich political donor, also called an angel or big money man.The New York Times has described fat cats as symbols of "a deeply corrupt campaign finance system riddled with loopholes", with Americans seeing them as recipients of the "perks of...

" over their salary, expenses, bonuses and pensions.

2010 Bonus Payments

The large RBS bonus payments subsequent to the UK government bailouts have led to a populist outrage.

More than 100 senior bank executives at the Royal Bank of Scotland were paid more than £1 million in late 2010 and total bonus payouts reached nearly £1 billion – even though the bailed-out bank reported losses of £1.1 billion for 2010. Unions were baffled that any bankers were getting bonuses, considering the bank is owned by the taxpayer. The 2010 figure was an improvement on the loss of £3.6 billion in 2009 and the record-breaking £24bn loss in 2008. The bonuses for staff in 2010 topped £950 million.

The CEO Stephen Hester got £8 million in payments for the year.

84 percent of the RBS is now owned by the UK government (taxpayer), which bought RBS stock for £45 billion, representing 50 pence per share. In 2011, the shares were worth 19 pence, representing a taxpayer book loss of £26 billion. Historically, the RBS stock price went from a high of around 1900 pence in 2006 to hovering around 19 pence in late 2011.

Kraft takeover of Cadbury

In November 2009, RBS switched from backing long-standing UK client Cadbury plc to back a hostile takeover from a US company Kraft Foods
Kraft Foods
Kraft Foods Inc. is an American confectionery, food and beverage conglomerate. It markets many brands in more than 170 countries. 12 of its brands annually earn more than $1 billion worldwide: Cadbury, Jacobs, Kraft, LU, Maxwell House, Milka, Nabisco, Oscar Mayer, Philadelphia, Trident, Tang...

 whilst being 84% owned by the UK Government.

Links to the arms trade

In December 2008 the British anti-poverty charity War on Want
War on Want
War on Want is an anti-poverty charity based in London, England. It seeks to highlight the needs of poverty-stricken areas around the world and lobbies governments and international agencies to tackle problems as well as raising public awareness of the concerns of developing nations while...

 released a report documenting the extent to which RBS and other UK commercial banks invest in, provide banking services for and make loans to arms companies. The charity writes in its report that RBS holds shares in the UK arms sector totalling £36.4 million, and serves as principal banker to four major arms companies, including BAE Systems
BAE Systems
BAE Systems plc is a British multinational defence, security and aerospace company headquartered in London, United Kingdom, that has global interests, particularly in North America through its subsidiary BAE Systems Inc. BAE is among the world's largest military contractors; in 2009 it was the...

, the UK's largest arms company. The report also details RBS's dealings with known producers of cluster munitions and depleted uranium
Depleted uranium
Depleted uranium is uranium with a lower content of the fissile isotope U-235 than natural uranium . Uses of DU take advantage of its very high density of 19.1 g/cm3...

.

Fossil fuel financing

RBS is "accused" of sponsoring oil and coal mining by pressure groups like Friends of the Earth
Friends of the Earth
Friends of the Earth International is an international network of environmental organizations in 76 countries.FOEI is assisted by a small secretariat which provides support for the network and its agreed major campaigns...

. Like many banks, RBS provides the financial means for companies to build coal-fired power station
Coal-fired power station
A coal-fired power station produces electricity, usually for public consumption, by burning coal to boil water, producing steam which drives a steam turbine which turns an electrical generator...

s and dig new coal mines at sites all over the world. RBS is helping to provide an estimated £8bn over the last two years to energy corporation E.ON
E.ON
E.ON AG, marketed with an interpunct as E•ON, is the holding company of the world's largest investor-owned energy service provider based in Düsseldorf, Germany. The name comes from the Greek word aeon which means eternity....

, and other companies utilising coal.

Bank of China and Burma

The bank's former 10% stake in Bank of China led to accusations of investing in the Government of Burma. The Group 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 are happy with these policies and the way in which they are applied."

Huntingdon life Sciences

In 2000 and 2001, the bank was the target of threats of violence over its provision of banking facilities for the animal testing company Huntingdon Life Sciences
Huntingdon Life Sciences
Huntingdon Life Sciences is a contract animal-testing company founded in 1952 in England, with facilities in Huntingdon, Cambridgeshire; Eye, Suffolk; New Jersey in the U.S., and Japan...

. The action resulted in RBS withdrawing the company's overdraft facility, causing the company to obtain alternative funding on a tight deadline.

Sakhalin II

On 17 January 2008 environmental groups wrote to Goodwin to urge him to exercise his leadership to resolve environmental problems associated with the ABN AMRO-financed Sakhalin II project (RBS, Fortis
Fortis (finance)
Fortis N.V./S.A. was a company active in insurance, banking and investment management. In 2007 it was the 20th largest business in the world by revenue but after encountering severe problems in the financial crisis of 2008, most of the company was sold in parts, with only insurance activities...

 and Banco Santander acquired ABN AMRO
ABN AMRO
ABN AMRO Bank N.V. is a Dutch state-owned bank with headquarters in Amsterdam. It was re-established, in its current form, in 2009 following the acquisition and break up of ABN AMRO Group by a banking consortium consisting of Royal Bank of Scotland Group, Santander and Fortis...

 in 2007).

Corporate jet

In June 2004, RBS admitted that it owned a Dassault Falcon 900 jet worth £17.5m for the use of Goodwin and the board. Based in Paris for maintenance and tax purposes, the jet is also leased to the bank's clients via its Lombard asset finance arm. In light of the 2008/9 recapitalisation program, new CEO Stephen Hester
Stephen Hester
Stephen Hester , is currently the Chief Executive Officer of The Royal Bank of Scotland Group.-Early life:Hester is the eldest son of a university professor...

 placed the jet up for sale in January 2009.

Canadian oil sands

Climate Camp activists criticise RBS for funding firms which extract oil from Canadian oil sands. The Cree aboriginal group describe RBS as being complicit in "the biggest environmental crime on the planet".

Banknotes

The group's pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...

 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
Banknotes of Northern Ireland
Banknotes have been issued for use specifically in Northern Ireland since 1929, and are denominated in pounds sterling. They are legal currency in Northern Ireland but technically not legal tender in any other country in the United Kingdom...

, though, like other private sector banks, it does not issue notes in the Republic of Ireland
Republic of Ireland
Ireland , described as the Republic of Ireland , is a sovereign state in Europe occupying approximately five-sixths of the island of the same name. Its capital is Dublin. Ireland, which had a population of 4.58 million in 2011, is a constitutional republic governed as a parliamentary democracy,...

, where the official currency is the euro.

See also

  • 2008 United Kingdom bank rescue package
    2008 United Kingdom bank rescue package
    A bank rescue package totalling some £500 billion was announced by the British government on 8 October 2008, as a response to the ongoing global financial crisis. After two unsteady weeks at the end of September, the first week of October had seen major falls in the stock market and severe worries...

  • 2009 United Kingdom bank rescue package
    2009 United Kingdom bank rescue package
    A second bank rescue package totalling at least £50 billion was announced by the British government on 19 January 2009, as a response to the ongoing global financial crisis. The package was designed to increase the amount of money that banks could lend to businesses and private individuals...

  • Fred Goodwin
    Fred Goodwin
    Sir Frederick Anderson Goodwin CA, FCIBS is a Scottish chartered accountant and former banker who was chief executive of the Royal Bank of Scotland Group between 2001 and 2009....

  • List of banks in the United Kingdom
  • European Financial Services Roundtable
    European Financial Services Roundtable
    The European Financial Services Roundtable is a European organization, located in Brussels, Belgium, of financial service companies to provide a voice on policies of the European Union related to financial matters...

  • High-yield debt
    High-yield debt
    In finance, a high-yield bond is a bond that is rated below investment grade...

  • Inter-Alpha Group of Banks
    Inter-Alpha Group of Banks
    The Inter-Alpha Group of Banks was created in 1971 by six European Community banks in order to provide a platform for the regular exchange of ideas and to explore areas for cooperation between its member banks...

  • UK Financial Investments Limited
    UK Financial Investments Limited
    UK Financial Investments Ltd is a company set up in November 2008 by the UK Government to manage its shareholding in banks subscribing to its recapitalisation fund. They include Lloyds Banking Group , Royal Bank of Scotland Group and Northern Rock...


External links

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