RBS 2013 Annual Report Download - page 150
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Business review
148
US Retail & Commercial continued
On 1 November 2013, RBS announced plans to accelerate its previously
announced partial initial public offering of RBS Citizens Financial Group
(RBSCFG) into the second half of 2014. RBS intends to fully divest its
position in RBSCFG by the end of 2016, leaving it as a standalone
regional bank, owned by public shareholders.
RBSCFG has commenced a number of actions in 2013 aimed at
improving financial performance. RBSCFG continued to drive profitable
growth in its core business by focusing on the customer and delivering a
differentiated experience. In addition, RBSCFG has launched a series of
initiatives aimed at narrowing the performance gap with competitors,
including selectively expanding lending areas where RBSCFG has
proven capabilities (such as Mid-Corporate, Specialty Verticals) and
selective expansion of risk appetite (moving from super-prime to prime in
certain products).
RBSCFG has also launched transformational initiatives in 2013 including:
• A special initiative called Project ‘TOP’, ‘Tapping Our Potential’. The
project intends to improve the overall effectiveness and efficiency of
the franchise by utilising ideas generated by our colleagues.
• On 7 January 2014, RBSCFG announced the sale of its Chicago-
area retail branches, small business operations and select middle
market relationships in the Chicago market to U.S. Bank National
Association, the lead bank of U.S. Bancorp. RBSCFG will maintain a
presence in Chicago through its commercial business lines and
several national consumer business lines not included in the sale(1).
The sale, expected to close in mid-2014 (subject to regulatory
approval), includes 94 Charter One branches in the Chicago area,
$5.3 billion in local deposits and $1.1 billion in locally originated
loans for a deposit premium of approximately $315 million, or 6%.
The proceeds will be reinvested in the remaining franchise, where
we have stronger market positions and better long-term growth
prospects.
Moreover, RBSCFG continued to grow its core franchise by consistently
delivering a differentiated customer experience and leveraging its strong
market presence (top 5 deposit market share in 8 of its top 10
Metropolitan Statistical Areas).
In 2013, Consumer Banking continued to improve customer convenience,
address the shift in customer preference, and expand its distribution
presence. Consumer Banking installed more than 900 intelligent deposit
machines (enhanced ATMs), improved the web account opening
process, simplified online banking log-in, and released a new mobile
application optimised for the iPad. Consumer Banking also implemented
a new branch image capture system throughout the network that
automates teller processing and offers secure paperless transactions,
debit card identification and clear receipts that provide on-the-spot
balance availability.
In recognition of the customer experience it offers, Money magazine
named Citizens Bank one of the “Best Banks in America” in 2013. In
addition to a “robust presence” defined by its many branches and ATMs,
Money recognised RBSCFG’s extended branch hours that include seven-
day-a-week supermarket branches. Money also noted that RBSCFG’s
convenience options also extend to its mobile banking apps for Android
and iPhone, which are generating positive customer feedback in the
industry. An August report issued by Xtreme Labs noted that “Citizens
Bank is the only bank with the highest rated apps on both Android (4.5
stars) and iOS (4.5 stars) platforms”.
The Small Business Banking and Commercial Enterprise Banking
divisions were integrated into one consolidated Business Banking division
within Consumer Banking, targeting companies with up to $25 million in
annual sales. The consolidation will enhance the customer experience,
transform sales and service, and align products and processes.
Commercial Banking remained focused on growing and deepening
relationships by providing thought leadership and improved product
capabilities to clients. Commercial and Industry loan growth was 8.5%
compared with the same time period a year ago, which was 1.3% higher
than the market(2). The strong results are partially due to the launch of
several growth initiatives, which includes expanding our MidCorporate
business nationally, as well as growing our Franchise Finance, Lender
Finance and other key industry verticals.
Corporate Finance & Capital Markets continued to take market share
from both regional competitors and large money centre banks.
Commercial Banking moved up in the Overall Middle Market Bookrunner
league table from an unranked position in 2009 to #6 by origination
volume and #8 by number of transactions in Q4 2013.
Furthermore, the strategic alliance with Oppenheimer allowed
Commercial bankers to deliver M&A ideas and solutions that are helping
us provide comprehensive solutions to our clients. This alliance won the
Barlow Research Associates’ Monarch Innovation Award for “Most
Innovative Product”. The award highlights RBSCFG’s commitment to
making it easier for middle market companies to develop financial
strategies that encompass both commercial banking and investment
banking products and services.
As a result of our ongoing focus on providing thought leadership to our
clients, our most recent client survey (Q3 2013) showed significant
improvement in Middle Market customer satisfaction metrics over the
same period a year ago. Net Promoter score increased from 36 to 50,
which is well above the peer average of 42. “Proactively Provides Advice
and Solutions” score was up from 62% to 85% and lead relationships as
a percent of total relationships improved from 51% to 58%. Both metrics
are strong indicators of our Commercial bankers’ thought leadership
capabilities.
Notes:
(1) RBSCFG will continue to operate several businesses in the Chicago market, including the consumer businesses lines of mortgage lending, Education Finance and Auto Finance. RBS Citizens, the
bank’s commercial banking division, will continue a diverse range of commercial banking operations in Chicago including Asset-Based Lending, Asset Finance, Equipment Leasing, Commercial Real
Estate, Treasury Solutions, Capital Markets, Sponsor Finance, Franchise Finance and the majority of its corporate banking business.
(2) Source: SNL Financial. Based on most recent regulatory data as of Q3 2013. Market includes all US banks required to file regulatory reports.