RBS 2011 Annual Report Download - page 16

14 RBS Group 2011
Strategy and
business objectives
RBS to be based on enduring
customer franchises, with
each business capable of
generating a sustainable return
in excess of its cost of equity
(>12%)
RBS to deliver its strategy from
a stable risk profile and
balance sheet, with each
banking business self-funding
(1:1 loan:deposit ratio)
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?
Franchises with substantial competitive strength
Track 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 on the Group’s cost programmes, 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
Continue to de-risk and shrink the Group’s Non-Core balance sheet. Careful control of future asset growth to support
Core customers profitably.
Funding programme
Limit over-reliance on wholesale markets to meet the Group’s funding requirements, while building up an
appropriate liquidity reserve. Generate a stable deposit base to fund each business.
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.
Focused on retail and commercial banking
Activity focused on UK, US and Ireland and supported by significant business investment plans.
Concentrate on the core strengths of our wholesale businesses
The restructuring of RBS’s wholesale businesses is already underway, refocusing the business in 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 returns, 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 the Group, RBS is dedicated to maintaining the strength of its Board
and senior management teams.
Strong risk management
Embed the new set of management disciplines to ensure that the RBS of the future is adequately protected,
notably by its risk management processes and frameworks.
Our business and our strategy
Progress on our Strategic Plan