RBS 2009 Annual Report Download - page 16

RBS Group Annual Report and Accounts 200914
Strategy and business objectives
RBS to generate a
sustainable 15%+ return
on equity, powered
by market-leading
businesses in large
customer-driven markets
RBS to deliver its strategy
from a stable AA category
risk profile and balance sheet
The chosen business mix to
produce an attractive blend
of profitability, stability and
sustainable growth
RBS management
hallmarks to include an
open, investor-friendly
approach, discipline and
proven execution
effectiveness, strong risk
management and central
focus on the customer
How are we going to do this?
Market-leading franchises
Target and measure market positions and customer satisfaction
in all core businesses
Income growth
Focus on businesses capable of delivering sustainable growth and
achieve market-level growth in each
Cost control
Deliver more than £2.5 billion efficiency savings by 2011 through the
Group’s new cost programme, whilst making essential investments
in our businesses. Achieve a cost:income ratio that places RBS among
the most efficient of its global peers
Rigorous capital and cost allocation
Accurately deploy the Group’s capital and allocate appropriate costs
to focus the Divisions on returns, as well as on profit growth
Reduced balance sheet scale
De-risk and shrink the Group’s balance sheet, including careful control
of future asset growth
Funding programme
Plans to limit over-reliance on wholesale markets to meet the Group’s
funding requirements, while building up an appropriate liquidity reserve
Stable and robust capital support
Focus on implementing state of the art risk controls, run-off of excess
risk concentrations and maintenance of strong equity capital
Focussed on retail and commercial banking
Activity focussed on UK, US and Ireland and supported by significant
business investment plans
Refocus on the core strength of GBM
GBM’s strategic plan is the most radical in The RBS Group, and will
refocus the business on its core franchises, with disciplined deployment
of capital to support its targeted client base
Exit Non-Core business lines
Expeditious run-off or sale of businesses and asset portfolios while
maximising the value obtained for the Group
Publish targets for risk/return balance
Demonstrate execution effectiveness by setting clear performance targets
for risk and return, and give regular updates on progress against them
Improve levels of disclosure
Rebuild confidence and trust with investors by combining clear
performance targets with improved disclosure
Set customer franchise targets for every business
Maintain excellent customer service as a core objective of the Group,
now defined with reference to a series of targets
Management change
At the centre of its efforts to rebuild standalone strength, RBS has
completely restructured its Board and its senior management team
Strong risk management
Introduce a new set of management disciplines to ensure that the RBS
of tomorrow will be fundamentally different from the RBS of yesterday –
notably in risk management
Targets by 2013
All our main Core businesses have
leadership positions
Sustainable 5-10% organic growth in
“normal” times
Group cost:income ratio, net of claims, <50%
Implemented in 2009
Achieve Non-Core run-off of £258 billion
funded assets (2008)
Additional reduction of £85 billion derivatives
exposure is also targeted
Group loan:deposit ratio of c.100%
Wholesale funding reliance <£150 billion
Liquidity reserves of c.£150 billion
Core Tier 1 capital ratio >8%
Two-thirds of Group profit and revenue to
come from retail and commercial banking
GBM to account for approximately one-third
of Group profit and revenue
Run-down of the Non-Core Division
All implemented in 2009
Roadmap
to recovery