RBS 2011 Annual Report Download - page 13

RBS Group 2011 11
However, all banks, and especially in the UK,
must adjust to much higher capital and
liquidity requirements, and substantially
changed wholesale funding markets. There
are particular pressures on the funding,
profitability and capital intensity of cross-
border, wholesale and investment banking
business lines.
RBS has therefore adjusted its business plan
to target a still more conservative capital and
funding structure overall in order to meet
current and prospective market and regulatory
challenges. This also includes further reduction
in balance sheet, capital usage and expense
base in the investment banking area, including
exit of the cash equities business, reduction
of the Group’s fixed income markets balance
sheet and combination of its international
corporate banking businesses. We expect
these moves to make the client proposition
in our wholesale businesses more focused,
and so stronger and more sustainable. It will
improve the stability of their funding and their
prospects for an improved return on equity.
These enduring principles – around Customer,
Risk and Shareholder – continue to drive our
strategy. The actions they give rise to should
enable RBS to prosper over the long term as
a leading international bank, anchored firmly in
the UK and serving customers, shareholders
and society well.
People
RBS people are doing a great job in serving
customers whilst driving the change we need.
Their engagement and efforts are essential to
our task. I thank them sincerely. While the
climate is tough for people in many walks
of life, that does not take away from the
exceptional demands we make on our staff
and the continuing need we have for their
talents, engagement and motivation.
Concluding remarks
In this letter a year ago I re-affirmed the
path ahead for RBS and how we planned
to travel down it. I am pleased to say we
remain on that track.
However, I also warned of the risks from
economic and regulatory/policy change.
These have indeed impacted strongly and
remain uppermost in our minds when looking
at 2012. We will continue to prioritise customer
service and risk reduction. We will strive to
complement this with determined measures
to improve business performance to pay for
the remaining ‘clean-up’ and then to produce
results for shareholders. We are building the
capacity of our business to earn its cost of
capital and produce solid returns as external
conditions allow.
RBS is an enduring financial institution playing
a key part in our markets and communities.
We support others. We depend on the support
of customers and our communities in turn.
We are working our way out of a tough legacy
whilst sustaining “business as usual” for the
vast majority of what we do.
I thank our staff and all our stakeholders
for their continued support.
Stephen Hester
Group Chief Executive
Our priorities
We are clear on
RBS priorities
•to serve
customers well
•to restore the Bank
to a sustainable
and conservative
risk profile
•to rebuild value for
all shareholders
These priorities are
interconnected and
mutually supporting.