RBS 2012 Annual Report Download - page 13

11
RBS GROUP 2012
Much of what RBS has accomplished since
2009 has been down to the hard work,
professionalism and commitment of our
people. I would like to thank every one who did
their best for our customers in 2012.
However, it became painfully clear during the
year that some of our employees had behaved
in ways that do not represent the values of
RBS. Their misconduct casts a shadow across
our progress and the good work of many
thousands in the Group. I have already spoken
about the behaviour of some people in RBS in
making LIBOR submissions. It was wrong. The
RBS Board has acknowledged that there were
serious shortcomings in our risk and control
systems, and also in the integrity of a small
group of our employees, and has taken action
to ensure full and proper accountability.
At times like these, your Board and the senior
management of the company have a duty to
lead. Our response has been diligent and
determined in tackling any hint of misconduct
and other failings, past or present. Our job has
been three-fold: to understand what had
happened and why, to put it right and then to
minimise the chance that such problems
happen again.
The failure of one of our IT systems in June
had unacceptable consequences for many of
our customers in the UK and the Republic of
Ireland. The Board Risk Committee has led a
rigorous review of what went wrong. The
Committee has sought to ensure that
customers who were affected are appropriately
compensated. It will continue to oversee the
management of technology risks and lead our
communication with customers, regulators and
others when the investigations conclude. The
response of our staff in branches, call centres
and elsewhere in dealing with the problems we
had caused to our customers was outstanding.
While these failings show our continuing need
to improve our risk and control systems, they at
times had a deeper cause. Some employees
put their own interests well ahead of
customers’ and shareholders’, ignoring the
difference between right and wrong. Your
Board expects our people to demonstrate the
highest standards of personal and professional
conduct. We know that our shareholders, our
customers and others will hold us to high
standards. It is a matter of great regret that the
conduct and values of a very small number of
our people fell so far short of what we expect.
That is why your Board is determined to ensure
that RBS exemplifies the culture you would
expect in a bank that serves customers well
and makes an important contribution to the
communities where we operate. It is why we
have taken steps to manage more effectively
what the industry now calls conduct risk. In
short, this is the risk that the company is
damaged because our people do not behave
properly. The Board Risk Committee has
supervised the development of our approach
to conduct risk management. Together, the
Board Risk Committee and Remuneration and
Performance Committee have developed
proposals that mean our reward policies will
support good conduct.
As a Board, we are determined that RBS
should be known in future for how we behave
as well as for commercial success.
On LIBOR, IT and many other issues, my fellow
directors have shouldered a considerable and
growing burden of work. I wish to thank them
for that and for their support throughout the year.
We know our future performance will be heavily
influenced by economic conditions. Consensus
forecasts for 2013 give some hope that this
year will see a return to modest growth in the
UK and continued, if moderate, expansion in
the US. Compared with a year ago, the
problems of the euro area appear less
pressing though key challenges remain.
Governments and central banks are now
managing that crisis more effectively and they
have started to put in place the financial
infrastructure needed to sustain the euro. We
are entitled to some confidence that the
economic environment in 2013 will be better
than at any time since the financial crisis struck
in 2007.
We are delivering what we said we would do in
our strategic plan. We have made RBS safer. It
is much closer now to being in the good
financial health that would allow shareholders
to receive a dividend and the Government to
start to sell its stake. The challenge that
remains is to serve customers better and to do
business in a way that makes you and us proud
to be part of RBS.
Philip Hampton
Chairman