RBS 2012 Annual Report Download - page 297

RBS GROUP 2012
295
Dear Shareholder,
I am pleased to present our Corporate governance report for the 2012
financial year.
It has been a challenging year for the Group, and the banking sector
as a whole, against a backdrop of difficult market conditions and a fast
moving regulatory environment. We are fortunate to have engaged and
dedicated Board members willing to commit extensive time,
individually and collectively, to work towards the recovery of the Group
and to build a sustainable business.
The Board
The Board has dealt with a very full agenda and key priorities during
2012 have been conduct risk and culture, the changing regulatory
architecture and regulatory investigations. It is recognised that a real
change is required in the culture of the banking industry and the Board
is committed to driving the required change and setting the appropriate
“tone from the top”. The Board is fully engaged in the work to improve
standards of behaviour within the RBS Group. We have also continued
to drive the delivery of the Group’s Strategic Plan and ensure the
Group has sufficient capital and funding to make it safer and stronger
for the long term. During 2013, the Board is expected to continue to
focus on capital, funding and risk as well as delivery of the Strategic
Plan.
As mentioned in my earlier letter to shareholders, events like the IT
incident in the summer of 2012 and investigations into LIBOR and
Markets controls have significantly increased the workload of the
Board during the year. The Board has demonstrated strong
engagement and leadership in dealing with these matters, and Board
committees have also taken a very prominent role, assuming
responsibility for specific issues. For example, the Group Audit
Committee has assisted in the management of the intense regulatory
agenda, the remediation of control issues in Markets and International
Banking and the review of LIBOR, the Board Risk Committee has
undertaken a review of the circumstances surrounding the IT incident
and the Group Performance and Remuneration Committee has had an
increased focus on accountability matters and stakeholder
engagement. The Group Sustainability Committee has expanded its
remit, as described below. As a result, the time commitment required
from our non-executive directors is extremely onerous and I am
grateful for their support.
The remit of the Group Remuneration Committee was reviewed during
the year in light of the Group’s Purpose, Vision and Values
programme. Whilst the Committee already takes into account wider
issues relating to people in making decisions about pay, it was agreed
to give the Committee an expanded oversight role of performance in
the round and the name of the Committee was changed to the Group
Performance and Remuneration Committee to reflect this. The Group
Sustainability Committee has also been given an enhanced role
including sustainability and reputation issues related to customer and
citizenship activities; overseeing delivery of the Purpose, Vision and
Values cultural and behavioural change; and overseeing the
sustainability aspects of the people agenda.
Further details on the role and principal activities of the Board are
contained within the Corporate governance report on pages 294 to
342. Individual reports from the Group Audit Committee, Board Risk
Committee and Group Performance and Remuneration Committee are
also contained within the Corporate governance report.
Corporate Governance in RBS
We remain committed to the highest standards of governance, integrity
and professionalism throughout the Group. As a global financial
organisation, our governance framework operates across both our
divisional and functional operating structure and geographically in the
regions in which we operate. During 2012, we have continued to
monitor compliance with the Corporate Governance policy that we
introduced in 2011 and key areas of focus have included risk
governance and regional governance, both of which were reviewed by
the Board Risk Committee on behalf of the Board.
Our statement of compliance with the UK Corporate Governance Code
(the “Code”) dated June 2010 is set out on page 343. Our Corporate
governance report also includes additional disclosures representing
early compliance with a number of the new provisions introduced by
the UK Corporate Governance Code dated September 2012 (the
“2012 Code”). Reporting under the 2012 Code will take effect for our
2013 financial year.
Letter from the Chairman