RBS 2014 Annual Report Download - page 139
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4
RBS – Interim Results 2015
Appendix 1 Capital and risk management
General overview* (continued)
Risk t
y
pe Overview
Country RBS continued to maintain a cautious stance as it becomes a UK-centred bank with a
focus on Western Europe. Total eurozone net balance sheet exposure decreased by
£12 billion or 12% to £85.6 billion in the first half of 2015. Eurozone periphery
exposures decreased by £7.4 billion or 24%, to £24.0 billion. Most of this reduction
was in Italy, driven by maturity of derivative transactions and higher short positions
due to uncertainty around Greece, and in Ireland, reflecting RCR portfolio sales and
currency movements. Total exposure to Greece was reduced from £0.4 billion to
£110 million and £86 million after the effect of credit mitigation. Exposure to Russia
remained under strict control and continued to be reviewed regularly against
international sanctions.
Operational The risks associated with RBS’s transformation plan are being closely monitored.
Separate to this activity, in June, there was a one or two day delay to payments
applied to some customer accounts.
A
detailed investigation is underway into the root
cause of the problem - the findings will be used to reduce the risk of recurrence.
Regulatory The level of regulatory risk remained high, given the large volume of regulatory
change still impacting the industry. Various legacy conduct issues also continued to
be managed.
Reputational The most material threats to RBS’s reputation continued to be as a result of conduct
and operational-related matters: RBS was the subject of investigations and review by
a number of regulators, some of which resulted in fines and public censure. The
failure of IT systems in June 2015 also impacted customers, with reputational
damage to the bank.
Business RBS further reduced its business risk profile by continuing to scale back CIB's
business activities and by pursuing RCR's asset disposal strategy.
Strategic 2015 has seen further progress in RBS’s shift towards the UK and the retail and
commercial banking segments to achieve a lower risk profile. Capital ratios continued
to increase further towards targets which, when attained, will provide RBS with
increased strategic options
*Not within the scope of Deloitte LLP’s review report