RBS 2013 Annual Report Download - page 38
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Letter from the Chairman
36
Dear Shareholder,
I am pleased to introduce our Corporate governance report, which sets
out in some detail how our Board and committees have risen to the
challenges of another demanding year.
Board and committee activity increased significantly in 2013, with a
number of key strategic issues taking centre stage. In late 2013, the
Board agreed a number of actions to accelerate the building of our capital
strength and enhance our strategic focus on our core UK businesses and
international corporate business. This included the outcomes of the Good
Bank/Bad Bank review and the subsequent creation of RBS Capital
Resolution (RCR). We also launched a full review of our businesses,
focused on the needs of our customers, improving our operations and IT
systems, and simplifying our organisational and decision-making
structures. Over the last five years, we have made substantial progress in
restoring our safety and soundness. Building on that important work, the
Board felt the timing was right for this review in order to target our future
efforts firmly on how we can best serve the needs of our customers,
shareholders and wider stakeholders.
Conduct and culture have been key areas of focus throughout the year
and our 2013 results reflect the impact that conduct related matters
continue to have on financial and operating performance. The Board fully
supports our new values, which were launched in 2013 and focus on
serving customers, working together, doing the right thing and thinking
long term. It is vital that the Board continues to set the tone from the top
to drive essential cultural change and that our governance framework
continues to evolve to support this and our key strategic changes. These
will be key priorities for the Board and its committees in 2014.
Board committees
Board committees continued to play a crucial role in our governance
framework during 2013, undertaking their complex work comprehensively
and effectively supporting the work of the Board.
The Group Audit Committee has monitored progress on various
regulatory investigations and has overseen the remediation of culture and
control issues in the Markets division. The Group Audit Committee has
also supported the Board in making its assessment that the Annual
Report and Accounts, taken as a whole, are fair, balanced and
understandable, in accordance with new provisions in the UK Corporate
Governance Code.
The Board Risk Committee has continued to oversee the remediation
activity following the major IT incident in 2012 and is also providing
oversight of the investigations underway in response to various
allegations made by Mr Tomlinson, customer and adviser to the
Department of Business, Innovation and Skills.
With the launch of our new values and programme of cultural change, the
Group Performance and Remuneration Committee has played a vital role
in ensuring that our remuneration policy supports the desired behaviours.
Remuneration decisions are considered in the context of performance on
a range of issues, including customer service, and reward behaviours
and outcomes that are aligned with our values.
The Group Sustainability Committee has provided oversight of the
introduction and embedding of our new values, including the launch of a
new code of conduct for our people, and continued its innovative
programme aimed at understanding and engaging more effectively with
key stakeholders.
Finally, we have established a new committee to provide board level
oversight of RCR.
Board changes
There were a number of changes to the Board’s composition during
2013. Stephen Hester stepped down as Group Chief Executive having
served for over five years on the Board. Stephen’s achievements in
stabilising the Group during a particularly turbulent period in its history
were considerable, and the Board is immensely grateful for Stephen’s
outstanding leadership and dedication throughout his tenure. Following
an extensive internal and external search, Stephen was succeeded by
Ross McEwan on 1 October 2013 and Ross now has his sights firmly set
on building a bank focused on our customers and shareholders. Also on
1 October 2013, Bruce Van Saun took up his new role as Chairman and
Chief Executive of RBS Citizens Financial Group, Inc and has stepped
down from the Board. Bruce’s contribution was, again, outstanding. He
has been succeeded as Group Finance Director by Nathan Bostock.
Nathan has since confirmed his resignation although his leaving date has
not yet been agreed and the search for his replacement is underway.
Two of our non-executive directors also retired from the Board in 2013.
Joe MacHale stood down in May, having served on the Board for nearly
nine years. Joe made a substantial contribution to the Board and the
committees he served on, providing valuable continuity throughout a
challenging period, and on behalf of the Board I would like to express our
sincere thanks for his hard work and commitment. Art Ryan also retired in
September after more than five years on the Board. The knowledge,
wisdom and experience Art brought to the Board and the Group
Performance and Remuneration Committee in particular, were greatly
appreciated. Art remains on the board of RBS Citizens Financial Group,
Inc.