RBS 2013 Annual Report Download - page 96
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Report of the directors
94
Business divestments
To comply with the European Commission State Aid requirements the
Group agreed a series of restructuring measures to be implemented over
a four year period from December 2009. These include the divestment of
Direct Line Insurance Group plc (DLG), the sale of 80.01% of the Group’s
Global Merchant Services business (completed in 2010) and the sale of
substantially all of the RBS Sempra Commodities joint venture business
(largely completed in 2010), as well as the divestment of the RBS branch-
based business in England and Wales and the NatWest branches in
Scotland, along with the direct SME customers across the UK (“UK
branch-based businesses”).
In October 2012, Santander UK plc withdrew from its agreed purchase of
the UK branch-based businesses. In September 2013, the Group
reached an agreement with an investor consortium led by Corsair Capital
and Centerbridge Partners for an investment in these businesses ahead
of a stock market flotation. This includes 308 RBS branches in England
and Wales and 6 NatWest branches in Scotland. The new bank will be
called Williams & Glyn, the brand RBS used for its branches in England
and Wales before 1985.
The Group sold a first tranche of ordinary shares representing 34.7% of
the ordinary issued share capital of Direct Line Group (DLG) in October
2012 through an initial public offering. On 13 March 2013, the Group sold
a further 16.8% of the ordinary issued share capital in DLG and ceded
control. This fulfilled the Group’s plan to cede control of DLG by the end
of 2013. On 20 September 2013, the Group sold a further 20% of the
ordinary issued share capital in DLG.
On 26 February 2014 the Group announced that it had entered into a
placing agreement to complete the sale of its remaining interest in DLG
(except for 4.2 million shares held to satisfy long term incentive plan
awards granted by the Group to DLG management). Accordingly, on
settlement of the placing, the Group will have completed the disposal of
DLG as required by the European Commission.
Strategic plan
Citizens Financial Group
In February 2013, the Group announced that it would commence work on
a partial flotation of RBS Citizens Financial Group, Inc and in November
2013 confirmed that a partial initial public offering is now planned for
2014. The Group intends to fully divest the business by the end of 2016.
The sale of RBS Citizens Financial Group, Inc is the cornerstone of the
Group’s new capital plan. The Group has appointed advisers and this is
on schedule for later this year.
RBS Capital Resolution
In November 2013, the Group announced the creation of RBS Capital
Resolution (RCR), to manage a pool of assets with particularly high long
term capital intensity and/or potentially volatile outcomes in stressed
environments. RCR became operational on 1 January 2014 with a
portfolio of £29 billion assets. The RCR Board Oversight Committee has
been established to provide oversight of RCR’s progress against, and
compliance with, its primary objective and asset management principles.
It reports to the Board on its own activities and recommends changes,
where appropriate, to RCR strategy.
Strategic review
In November 2013, the Group announced that it was undertaking a
comprehensive business review of its customer-facing businesses, IT
and operations and organisational and decision making structures. As
described on pages 8 and 9, the Group has announced the results of its
Strategic review, resulting in it being realigned into three businesses:
Personal & Business Banking, Commercial & Private Banking, and
Corporate & institutional Banking. In addition, the Group will be
rationalising and simplifying its systems, based on a target architecture
with improved resilience.
Employees
As at 31 December 2013, the Group employed 118,600 (full-time
equivalent basis) throughout the world. Details of employee related costs
are included in Note 3 on the consolidated accounts.
The Group operates certain employee share plans in which eligible
employees are able to participate and which align the interests of
employees with those of shareholders.
Employee learning and development
The Group maintains a strong commitment to providing all its employees
with the opportunity to grow through learning and development, which in
turn helps to achieve business objectives and drive excellent customer
service. Supporting the professionalisation of our front line staff, just over
18,000 customer facing employees are now part of accreditation
programmes aligned to the Chartered Banker professional standards.
This helps our employees deliver the best service to our customers whilst
working towards a recognised professional standard.
Employee communication
Employee engagement is encouraged through a range of communication
channels, at both local and Group level. These channels provide access
to news and information in a number of ways, including the intranet,
magazines, video, team meetings led by line managers, briefings held by
senior managers and regular dialogue with employees and employee
representatives.
The Group Chief Executive and other senior Group executives regularly
communicate with, and encourage feedback from, employees across a
range of channels.
Employee feedback
Every year since 1999, through the Your Feedback survey, employees in
all our businesses have shared their thoughts about what it’s like working
for RBS. In 2013, we renamed the survey Our View, reflecting the
emphasis we place on a shared responsibility to build a better bank. The
survey enables the business to monitor levels of employee satisfaction
and engagement and how these compare with other companies. It also
provides a further mechanism for RBS to track employee perception of
the progress we are making in strengthening our culture. Insights from
Our View inform what the business needs to do to improve the way it
works, whether it’s a local issue or something that affects everyone.