RBS 2007 Annual Report Download - page 14

RBS Group • Annual Report and Accounts 2007
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Group Chief Executive’s review continued
Group Chief Executive’s review
In recent years we have created options that will allow the
Group to pursue the opportunities for profitable growth
stemming from these economic changes. Rapid economic
growth raises demand for the routine risk management and
payments services in which we have excellent capabilities.
Economic development requires infrastructure investment,
playing to our strengths in project finance. Growing demand
for commodities was among the factors prompting our
forthcoming joint venture with Sempra Commodities. We
increased the number of private bankers in Coutts Asia to
capitalise on the region’s growing wealth management market.
We had also positioned the Group for continued growth in
mature markets. In UK retail banking we anticipated that
households would save more and successfully boosted our
sales of savings and investment products. We focused on
investing in customer service in UK Corporate Banking and
have strengthened our market leading position. In the US our
distribution and product capabilities now provide an excellent
platform in the corporate and commercial markets.
ABN AMRO
The acquisition of ABN AMRO gives us the ability to accelerate
our existing strategies for growth outside the UK, particularly
in rapidly expanding markets, while adding complementary
capabilities and customer franchises to our portfolio of
businesses. The integration has made a strong start, and
synergies are now expected to total 2.3 billion, compared
with our original estimate of 1.7 billion.
Our employees
The quality and hard work of our employees are the source
of the Group’s success. Each year we seek their views,
benchmark their responses against our peers and then act on
what they tell us. While the weakening external environment
and the demands of the ABN AMRO transaction made 2007
a challenging year for many employees, a record 90% of our
employees participated in Your Feedback 2007. We made
progress on all of the 15 measures, exceeding the Global
Financial Services Norm on every indicator.
Group structure
RBS’s organisational architecture has remained largely
unchanged since 2000. It now needs to evolve to recognise the
fact that we are present in over 50 countries and to facilitate
the integration and operation of the ABN AMRO businesses.
This new organisational structure will give us the right
framework for managing the enlarged Group in a way that
fully capitalises on the enhanced range of attractive growth
opportunities now available to us.
Some of our businesses can best serve customers’ needs
by organising themselves on a global basis. Others are best
managed with a more regional focus. We have therefore
established Global Markets which comprises two divisions,
Global Banking & Markets (‘GBM’) and Global Transaction
Services (‘GTS’). The first corresponds largely to the existing
GBM, enhanced by the product capabilities and customer
franchises of ABN AMRO. GTS will combine ABN AMRO’s
world class capability in international payments with our existing
corporate transaction banking and merchant acquiring activities.
It ranks among the top five payments businesses in the world
with operating profit of approximately £1.6 billion in 2007.
The remainder of our banking franchises have more distinctively
national or regional characteristics. It makes sense to continue
to manage them on this basis. We are now represented in an
expanded range of countries, and in order to ensure effective
coordination and control we have regrouped our retail and
commercial banking activities into four regional divisions: UK
Retail and Commercial Banking, US Retail and Commercial
Banking, Europe and Middle East Retail and Commercial
Banking, Asia Retail and Commercial Banking.
RBS Insurance will retain its existing structure and strategy.
We will further extend our manufacturing model across the
enlarged Group globally.
Outlook
It is tempting to think of the task before us in 2008 only in
terms of the integration of ABN AMRO, and delivery of the
substantial cost and revenue synergies. To do so, however,
would overlook the real opportunities for the enlarged Group.
Whilst the future seems as difficult as ever to predict, it is
clear that we enter 2008 with real momentum behind our
organic growth, and with our product range, distribution
capabilities and customer franchises materially enhanced.
Coupled with our greater presence in the world’s largest and
fastest growing economies, there is much to be done, but a
confidence that it will be, to the benefit of our shareholders,
our customers and our employees.
Sir Fred Goodwin
Group Chief Executive