RBS 2013 Annual Report Download - page 10

08
Our business
model and
strategy
Our major source of income in our retail and
commercial banking businesses is net interest
income. This is the difference between the
income we earn from the loans and advances
we have made to our personal, corporate and
institutional customers and on our surplus
funds and the interest we pay on deposits
placed with us by our customers and our debt
securities we have issued. We also earn fees
from financial services and other products
we provide to our customers as well as rental
income from assets we lease to our customers.
Our Markets business earns income from client
driven trading activities particularly Rates,
Currencies, Asset-Backed Products and Credit.
Our leading customer franchises serve 24
million customers globally, of which more than
70% are in the UK. We aim to provide them
with a comprehensive range of products,
delivered through a number of channels,
which are increasingly digital.
We do business in competitive markets but we
have strong franchises and good growth
opportunities, and we aim to target our
investment to maximise these opportunities.
Over the period 2009-2013, the RBS strategic
approach has focused first and foremost on
rebuilding financial resilience:
• reducing total assets, principally through
the run-off of Non-Core;
• reducing risk concentrations;
• reducing dependence on short-term
wholesale funding while achieving a
deposit-led funding model; and
• reducing balance sheet leverage.
This emphasis was necessary in order to
correct historical weaknesses and to set
RBS on a sound footing, but it left us
falling short in our ability to build long-term
shareholder value on the foundation of serving
our customers and meeting more of their
financial needs.
In 2013 we have refocused our Markets and
International Banking businesses to deliver a
targeted wholesale banking proposition to UK
corporates and global financial institutions.
The RBS business model is
that of a UK-focused retail
and commercial bank. Our
market leading customer
franchises in the UK –
serving personal, business
and corporate customers –
form the anchor of the RBS
strategy. Our wholesale
banking operations in the
corporate and institutional
business enhance and
complement the proposition to
our commercial customers.