RBS 2013 Annual Report Download - page 25

23
Chairman’s statement
Bruce Van Saun took up his new role as
Chairman and Chief Executive of RBS Citizens
Financial Group, Inc. on 1 October 2013 and
has stepped down from the Board having
done an excellent job as our Group Finance
Director. He was succeeded by Nathan
Bostock, who has since confirmed his
resignation; his leaving date has not yet been
agreed and the search for his replacement is
under way.
Two of our non-executive directors, Joe
MacHale and Art Ryan, also retired from the
Board in 2013 and Philip Scott will step down
from the Board by 31 October 2014. I thank
them all for the hard work and wisdom they
have brought as directors. In December 2013,
we also welcomed Robert Gillespie as a new
non-executive director. I would like to take this
opportunity to express my appreciation to all
of my fellow directors for their commitment and
readiness to deal with the unusual challenges
of a government-controlled listed company.
Ross McEwan is bringing a fresh perspective
to RBS’s challenges, and that perspective
is now bearing fruit in the results of the
strategic review that we are setting out. The
Board believes that this was the right time
for this review, so as to ensure that we target
our future efforts firmly towards serving
our customers, shareholders and wider
stakeholders in the best possible way.
Regrettably, last year brought further
reminders that many of our customers
and stakeholders do not trust us to do so.
In response to persistent criticism of our
performance in lending to SMEs the Board
commissioned an independent review by Sir
Andrew Large; we expect to adopt all of his
recommendations.
We also faced accusations that our Global
Restructuring Group had been culpable
of “systematic and institutional” behaviour
in artificially distressing otherwise viable
businesses. No evidence has been provided
for that allegation but it has, nevertheless,
done serious damage to RBS’s reputation.
That is why we instructed the law firm Clifford
Chance to conduct an independent review.
This is an area where all banks routinely make
difficult judgments, and indeed the banking
sector has been criticised for excessive
forbearance in recent years, charged with
supporting unviable “zombie” companies for
too long.
Issues like this continue to underscore the
important role played by culture and values
in enabling us to become the trusted bank
we aspire to be. The Board fully supports the
new values we launched in 2013, and it is
vital that we continue to set the tone from
the top in the coming year to drive essential
cultural change.
On many of these issues we have engaged
closely with HM Treasury (HMT) through
UK Financial Investments, which manages
HMT’s shareholding, and with our two main
regulators, the Prudential Regulation Authority
and the Financial Conduct Authority. Over
the course of the year they have all proposed
actions for consideration by the Board.
Ross McEwan has spoken of the need to
reset our relationship with HMT and our main
regulators. I hope and believe that we have
made good progress in this direction. There
is a desire on all sides that our relationship
with the Government in its role as controlling
shareholder should be primarily managed by
UKFI on a commercial, arm’s length basis. I
want to make it clear, however, that the path
we have set and decisions we have taken
reflect the Board’s view of what is in the
interests of all RBS’s shareholders and other
stakeholders.
We are monitoring the debate on Scottish
independence but, as I and my colleagues
have said many times, we are politically
neutral. We don’t support political parties
or political movements. We will respond to
whatever voters decide and governments
agree.
Clearly there are issues we are looking
at – currency, the application of financial
regulation, lender of last resort, credit ratings
– which could affect us. But there is real
uncertainty about how any of these matters
would be settled in the event of a Yes vote and
the outcome would depend on negotiations
between the two governments. Indeed, there
could be a prolonged period of uncertainty
over each of the issues so it really is
impossible to quantify with any precision what
the effects of each might be right now.
We are confident that the actions announced
will deliver a customer-focused bank with
undoubted capital strength, the potential
for attractive returns and an ability to
recommence dividends over the medium term.
Philip Hampton
Chairman