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Royal Bank of Scotland Group (LSE:RBS) shares continued their bumpy ride since 2008, even after its rather healthy Interim Management Report for the first quarter was issued on Friday morning. RBS stock closed at 24.47p, down a modest 0.33% on trading of 184,525,074 shares. In a rare move during a banking holiday, RBS announced this morning that it had appointed a new head of its retail banking arm
Today’s Announcement
The bank released and announcement early this morning that it had appointed Ross McEwan as Chief Executive of UK Retail. Mr. McEwan is a New Zealander, working at the Commonwealth Bank of Australia, where he had been considered a leading candidate to become CEO of that bank after the departure of Ralph Norris last year. McEwan will replace Brian Hartzer, who left RBS earlier this year. From a bigger picture perspective, McEwan will be taking the reins of a business that contributed 40% of the firm’s profits for the six months ending December 2011, with £100 billion of customer assets and 19 million customers as part of the bank’s reorganisation of its retail business. Although McEwan is not expected to be on the main board of the bank, he is expected to be one of the bank’s eight highest paid employees and he will sit on CEO Stephen Hester’s executive committee. Mr. Hester commented that “We have more to do to fulfil the full potential of the retail business in a changing banking market.”
Interim Report Highlights
The bank reported an operating profit of £1.2 billion versus a £1.1 billion profit at the end of the quarter last year and a £144 million loss in the previous quarter. Operating profits in the UK were up 4% to £477 million, despite a £310 million operating loss at Ulster Bank. Pre-tax losses were £1.4 billion due to a £2.4 billion provision for credit adjustments. Whilst this may appear to be bad news, in reality it is quite the opposite, as it is an indication that the bank is able to repay its debt. The Direct Line Group, the RBS insurance division, reported an operating profits increase of 25% to £84 million, a return on tangible equity of 11%.
Salient Comments
An analyst at Hargreaves Lansdown commented that “In all, life support is being removed, with the bank’s near failure now being consigned to another chapter in its history.” CEO Stephen Hester said, “We are happy with progress in the first quarter though the economic and regulatory backdrop remains tough. RBS continues, markedly, to regain strength and resilience. Our focus is on improving the future for customers and our business whilst ensuring that the bank’s past issues are dealt with.”
Company Spotlight
Royal Bank of Scotland Group is a banking and insurance holding company based in Edinburgh, Scotland. The RBS Group operates a variety of banking brands in the business banking, private banking, insurance, and corporate finance industries in North America, Europe, and Asia. Some of the main subsidiaries of the RBS Group include The Royal Bank of Scotland, National Westminster Bank, Ulster Bank, Drummonds, Coutts & Co. and Citizens Financial Group. In the insurance industry, RBS group owns Churchill Insurance, Direct Line, Privilege, and NIG.
References
↑ The Guardian
↑ 4-Traders
↑ Wall Street Journal
↑ The Scotsman
↑ Official Company Report
↑ Official Company Information
