RBS 2012 Annual Report Download - page 30

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DIVISIONAL REVIEW
Markets
Peter Nielsen
Co-CEO, Markets
Performance highlights 2012 2011
Operating profit before impairment losses (£m) 1,546 937
Impairment losses (£m) (37) (38)
Operating profit (£m) 1,509 899
Return on equity (%) 10.0 6.1
Operating profit of £1,509 million was 68 per cent higher than in 2011. Income
increased by 2 per cent and expenses were sharply lower, falling 16 per cent, with staff
expenses down by 26 per cent. Return on equity was up on 2011 at 10.0 per cent.
Suneel Kamlani
Co-CEO, Markets
Making RBS safer
We took significant steps to reduce risk.
We reduced our third party assets from
£312.6 billion to £284.4 billion and we cut
risk-weighted assets from £120.3 billion to
£101.3 billion.
Changes we made to the structure of our
business to reduce risk.
We moved out of the cash equities and
equity risk trading businesses that had
made losses.
We transferred a substantial part of RBS N.V.
to RBS plc. That made our structure simpler
and reduced the capital we need to hold.
Improvements we made to internal controls make
clear to our leaders that it is important to manage
their teams effectively. We have improved
oversight of our traders through better
supervision and tighter checks and controls.
Building a better bank that serves
customers well
Our job is to help clients find the money they
need so that they can invest. Across Europe in
2012, we were the leading bank in supporting
clients issuing investment grade corporate
bonds, running c.£20 billion of issues of these
bonds.
We:
worked with the International Banking
division to organise a £1 billion refinancing
for the holiday company Center Parcs;
helped to raise US$2.2 billion for Formula 1;
we were a structuring adviser on a three-part
hybrid bond, helping BG Group strengthen
its capital structure, maintain its credit rating
and diversify its funding;
underwrote and arranged €700 million loan
and £466 million fund raising to allow DS
Smith to buy SCA Packaging to create
Europe’s second-biggest packaging
company.
We are innovative. We helped UBS to raise
US$2 billion. It was the first time the Swiss bank
had issued contingent capital to institutional
investors. We were the book runner on an
offshore renminbi transaction for Veolia
Environnement. This was the first renminbi
transaction on Euronext Paris.
We received a number of awards for our
client successes.
The Euromoney Awards for Excellence
named us Best Debt House in the UK.
We were Best for Sterling Issues and Best for
Liability Management in the Euromoney
Primary Debt Survey.
International Financing Review named us
EMEA Structured Finance House of the Year
for an unprecedented second year in
succession.
Euromoney FX Survey 2012 rated us number
one for overall client service in the EMEA
time zone.
The Derivatives Intelligence Awards named us
Interest Rate Derivatives House of the Year.
We recorded these achievements while creating
Markets as a new division and reducing costs
by £541 million. Our focus is now on serving
clients in businesses where we have market-
leading products.
Changing our culture
We are changing our culture in a number
of ways.
Proper conduct is a core principle for all our
people. A continual emphasis on the need to
‘do the right thing in the right way’ is part of
our drive to embed the right behaviours in
our culture, and ‘treating customers fairly’ is
a central principle in that culture
We have changed how we manage people.
The Accountability Review process ensures
appropriate management of misconduct,
including consequences for remuneration
Diversity and Inclusion has been a key area
for the Markets business.
We launched the M&IB transformational
leadership programme to develop leaders
who are more agile, people-focused and
commercially aware.
Watch or listen to Peter Nielsen and Suneel Kamlani www.rbs.com/AnnualReview