Royal Bank of Scotland (RBS) says it is to change its name to NatWest Group later this year as it commits to a new future following the taxpayer bailout of 2008.
While announcing the bank’s annual results for 2019, which included a surge in profits, new chief executive Alison Rose set out a series of new priorities for the lender including incentive-linked targets covering climate and support for ethnic minority entrepreneurs.
RBS, which remains 62%-owned by the government, said there would be no impact on jobs through the rebranding of the Edinburgh-based group, which will be widely seen as an effort to shake off the toxic legacy of its rescue.
It said that the move was driven by the fact that 80% of its customer base came under NatWest but insisted that RBS branches would remain so named.
RBS reported an attributable profit – its main bottom line measure – of £3.1bn for 2019 – almost double the previous year’s £1.6bn.
It said the figure was bolstered by the sale of its stake in Saudi bank Alawwal but hampered by a £121m loss in its struggling NatWest Markets division.
The additional £900m provision it took in the third quarter of the year for the mis-selling of PPI – payment protection insurance – also dented the performance.
Nevertheless, its dividend plans meant the government was in line to receive £1.7bn, RBS said.
It maintained a cautious outlook
The shake up ordered by Ms Rose, who succeeded Ross McEwan as chief executive late last year, included plans to cut back the investment bank through a halving of NatWest Markets’ risk weighted assets to £20bn in “the medium term”.
On the environment, the bank is targeting a date of 2025 to ensure its own operations are “climate positive”.
There was a further pledge, in a week that saw BP promise to go net carbon zero by 2050, to secure a 50% reduction in the impact of its climate financing by 2030.
Sky News reported on Thursday that, as part of that commitment, Ms Rose was to stop lending money to coal companies by the end of the decade.
There was also a target to bolster enterprise through a diversity focus.
The aim was to support the creation of 50,000 new businesses by 2023 with support concentrated outside London and towards women and ethnic minorities.
Ms Rose said she was seeking a “purpose-led bank”.
She told investors: “Today marks the start of a new era for our bank as we announce our new purpose – to champion potential, helping people, families and businesses to thrive.
“These results are a reminder of the strong foundations we have built. Our profits are up, our capital position remains strong and this year we will have returned a further £2.7bn to our shareholders.
“But our performance doesn’t yet match the potential that exists in this bank. We can deliver so much more.
“The way people live their lives has changed. And their expectations of companies are changing too; looking for us to deliver not only financial performance but a positive contribution to society; benefiting customers and communities as well as shareholders.
“The future of this bank depends on us successfully delivering on both.”
RBS shares fell in early trading – by as much as 4%.
Neil Wilson, chief market analyst at Markets.com, said: “The cautious outlook, with management expecting ‘challenges’ to income ahead, and weaker NIM (net interest margin) are part of the problem.
“Equally RBS is forecasting up to £1bn in restructuring costs this year from the refocusing of NatWest Markets and the ongoing shrinking of the group’s cost base.
“There will also be a £200m hit from regulatory changes affecting the personal business.”