Natwest Group Plc · LSE:NWG
Natwest — RBS Americas — Citigroup Investors presentation (March 2009)
41 slides from Natwest's conference presentation, Mar 16, 2009
Slide 1: RBS Americas: Presentation to Citigroup Investors
RBS Americas Presentation to Citigroup Investors Ellen Alemany | John Fawcett | Bob McKillip 16th March 2009
Slide 2: Agenda
Agenda Introduction: Citizens Financial Group Overview Ellen Alemany Chairman and Chief Executive Officer, Citizens Financial Group, Inc. and RBS Americas Citizens Financial Group Financials John Fawcett Chief Financial Officer, Citizens Financial Group, Inc. and RBS Americas Global Banking and Mark
Slide 3: Ellen Alemany
Ellen Alemany Chairman and Chief Executive Officer, Citizens Financial Group, Inc. and RBS Americas
Slide 4: Revised group structure
a< RBS aK NDS Revised group structure RBS Group Executive Management ( (Executive and Management Committee Members) "Ta i wERaR ‘Cormac McCarthy John Baines CEO Ulster Bank EO UK Reta CEO Wealth cow ‘Also Management Committee Members: IEEE Customer facing businesses: John McCormick Representing Asia
Slide 5: Citizens Financial Group Organization
Organization Citizens Financial Group Branch Banking Retail Business Banking GTS Debit Cards Investments Consumer & Business Banking Wealth Management RBS Lynk Kroger Personal Finance Consumer Finance Mortgage Home Equity Cash Management Cards Indirect Auto Student Loan Commercial Commercial Lending
Slide 6: Citizens
Citizens Focus on retail and commercial customer relationships in core footprint Retention Rationale Strong franchise and attractive portfolio in core markets Meets the Group strategic tests over cycle Improves Group funding ratios Improves Group geographic balance and opportunities Sale w
Slide 7: Worst housing and financial crisis since the Great Depression
"… worst housing and financial crisis since the Great Depression." – July 2008 UBS Fixed Income & FX Research Housing 190 5.0 One in five homeowners was distressed at the end 185 4.8 4.6 of 2008 180 4.4 175 4.2 Dec house prices were 18.5% off YOY, the biggest drop in the 21-year history of the d
Slide 8: Our Footprint in the Case-Shiller 20 Index
Our Footprint in the Case-Shiller 20 Index as of Dec 2008 230 220 210 200 190 180 170 160 $ 150 140 130 120 110 100 90 80 70 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 2005 2006 2007 2008 DFP D1Y Bos
Slide 9: The Strategic Way Forward
The Strategic Way Forward Strategic StrategicObjectives Objectives Where Wherewe wewant wantto tobe be "Servicing important relationships in our footprint" Top Regional Bank Long-term performance targets In Footprint – Normal period growth: 4% Relationship Connectivity – ROE: 15% Æ 18% – Wal
Slide 10: Where we are and how we got here
Where we are and how we got here Industry CAGR Loans ($B) 04’-3Q08’ (%) +8% 112 113 100 106 Pre-2004 Citizens grew primarily 87 through acquisitions 8 – 28 acquisitions from 1983 to 2004 – Latest major acquisition was Charter One Financial in 2004 2004 2005 2006 2007 3Q 2008 Since then, Citizens
Slide 11: A thirteen state franchise punctuated by distinctly different penetration
A thirteen state franchise punctuated by distinctly different penetration Citizens Financial Group Business Metrics 2008 2007 YOY% Total Households 3.4MM 3.4MM (0.1%) # Accts Retail Checking 3.5MM 3.4MM 2.7% # Accts Small Business Checking 456,000 436,000 4.6% # Accts Credit Card 1.4MM 1.7MM (15.6%)
Slide 12: New England
New England Competition 9 Bank of America Sovereign (Santander) 9 TD Banknorth 9 Indicates they are in various stages of significant integration challenges Well situated, top tier franchise in terms of deposits and branch share (13% and 11% respectively) Competitive advantage in customer loyalty
Slide 13: Mid-Atlantic
Mid-Atlantic Adirondack Disposition Branches 18 Competition Colleagues 84 Deposits** $574MM 9 JPMorgan Chase Loans** $112MM Closing Date Sales price Nov 7, 2008 $72.5MM 9 Wachovia (Wells Fargo) Pre-tax gain $62.5MM ** Based on Oct. 31st closing 9 PNC Financial schedules. Actual conversion less due t
Slide 14: Midwest
Midwest Competition 9 JPMorgan Chase Fifth Third 9 Bank of America (LaSalle) KeyCorp 9 National City Harris (Bank of Montreal) Indiana Disposition 9 Indicates they are in various stages of significant integration challenges Branches* 65 Colleagues 359 Deposits $379MM Loans $16MM Target Closing Date
Slide 15: RBS Americas Manufacturing
RBS Americas Manufacturing Strategic StrategicPriorities Priorities Key KeyInvestment InvestmentInitiatives Initiatives Drive material efficiency saves Upgrade our systems capabilities to support through automation future income growth and efficiency saves. Straight through processing Branch
Slide 16: We have tightened underwriting standards
We have tightened underwriting standards Revisions in credit / underwriting criteria – Throughout the course of 2008 the vast majority of credit policy changes and adjustments were focused on tightening credit standards and providing more explicit guidance with regard to credit stewardship and colle
Slide 17: Credit environment still difficult
Credit environment still difficult … Citizens’ loss rates are low relative to peers, however they are likely to increase in the next 12 months, similar to rest of the industry Net charge-off to loans ratio* % 2007 2008* 0.4 1.8 0.6 1.9 and more to 0.3 1.2 come 0.5 1.1 0.3 0.6 * Actual data for 2008
Slide 18: ... but we are well positioned
… but we are well positioned Our OurNPLs NPLshave haveincreased increasedsignificantly significantlyless less . .. .. .And Andwe wehave havebeen beenmore moreconservative conservativewith with than most other banks than most other banks …… our provisions our provisions % Change in NPL* % Coverage ra
Slide 19: Marketing Programs and Promotions
Marketing Programs and Promotions 18
Slide 20: John Fawcett
John Fawcett Chief Financial Officer, Citizens Financial Group, Inc. and RBS Americas
Slide 21: Total CFG 2008 P&L
Total CFG 2008 P&L Citizens Financial Group IFRS - $MM US Retail & Commercial GTS Manufacturing Central Items Total CFG Banking Total Revenue 5,578 525 (1) 0 6,102 Staff Expense (1,250) (108) (188) (35) (1,581) Other Operating Expense (762) (153) (648) (46) (1,610) Total Expenses (2,012) (261) (836)
Slide 22: Financial Overview: US Retail & Commercial Banking
Financial Overview US Retail & Commercial Banking $M 2008 2007 Total Revenue 5,578 5,564 Staff Expense 1,250 1,197 Revenues essentially flat with a nominal Other Operating Expense 762 728 increase in Net Interest Income Total Direct Expense 2,012 1,925 somewhat offset by a reduction in Fee Income
Slide 23: Asset Distribution
Asset Distribution US Retail & Commercial Banking 2008 FY Investment Portfolio EOP Asset Distribution $MM EOP Dec-08 Dec-07 US Treasury Securities 84 90 $152B US Govt Agencies 14,179 16,226 Municipal Bonds-Notes 125 122 Other Bond/Notes 1,666 1,886 Other Goodwill Mortgage Passthru Cert 11,182 8,979
Slide 24: Loan Distribution and Impairments
Loan Distribution and Impairments 2008 FY EOP Loans Impairment Trend 2,000 $113B 1,500 Consumer $M Mortgage 1,000 Corporate & 14% Industrial 500 27% 0 2006 2007 2008 Non-SBO 320.2 351.3 1,337.6 SBO 12.1 328.6 591.6 Home Equity Total 332.3 679.8 1,929.3 25% Commercial Mortgage 10% US Home Equity Char
Slide 25: Citizens Peer Group Analysis (Funding Composition)
Citizens Peer Group Analysis (Funding Composition) As of 12/31/08 Loans to Domestic Deposits 350% Loans to deposits are calculated by dividing 300% net loans and leases by domestic deposits, 250% excluding broker deposits. 200% 150% CFG is well below the mean and median of 100% the peer group (1
Slide 26: Citizens Peer Group Analysis (Funding Composition)
Citizens Peer Group Analysis (Funding Composition) As of 12/31/08 Secured Borrowings % of Total Liabilities &Tangible Equity 45% 40% Secured borrowings include repos, trading 35% liabilities, FHLB advances and other 30% borrowings (which would include DW, TAF 25% 20% and other government facilitie
Slide 27: Capital Ratios
Capital Ratios CFG Ratio Summary March 2005 - December 2008 Well 12% Capitalized Dec Minimums 2008 10.0% 11.22% Ç+122 11% 10% 9% 6.0% 9.16% Ç+316 8% 7% 5.0% 6.96% Ç+196 6% Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec 2005 2006 2007 2008 Total Leverage Ratio 6.07% 6.15% 6.15% 6.33%
Slide 28: Ellen Alemany
Ellen Alemany Chairman and Chief Executive Officer, Citizens Financial Group, Inc. and RBS Americas
Slide 29: Key takeaways
Key takeaways Recap We have a strong franchise that can meet performance expectations We need to focus on where we have strategic advantages Strong franchise in world's largest economy – New England and Mid-Atlantic regions Self funding and self sustaining – Customer/Business-driven Provid
Slide 30: Bob McKillip
Bob McKillip Interim Co-Head of GBM Americas Head of North America Corporate Coverage & Advisory
Slide 31: GBM Americas High Level Management Team
GBM Americas High Level Management Team Chief Executive, Global Banking & Markets Deputy CEO, John Hourican Head of Markets, GBM GBM Marco Mazzuchelli Peter Nielsen Interim Co-Head Interim Co-Head GBM Americas, GBM Americas, Banking & Origination Sales & Trading Bob McKillip Mike Lyublinsky Portfoli
Slide 32: GBM Americas: Re-size & Re-focus
GBM Americas: Re-size & Re-focus Focus on strategic client relationships: 1100 clients across corporates, FI’s and public sector. Planned Actions Goals Exit Leveraged Finance lending Build an enduring client franchise Exit Real Estate Lending Target 15% after-tax return Refocus Latin Ameri
Slide 33: A Global Bank For Global Clients
A Global Bank For Global Clients Corporates Financial Institutions* Target GBM clients 1,000 ~3,000 clients 400 Corporates, 800 Financial EMEA Institutions, 300 Public Sector 500 Americas 200 Joining up issuers and Asia Pacific investors * Including public sector 32
Slide 34: RBS Competitive Positioning – 2008
RBS Competitive Positioning – 2008 Top 5 Global U.K. Europe Americas Asia Top 6-10 > 11 Corporate lending 2 1 1 5 >11 PEF 1 PEF 1 PEF 4 PEF 15 Lending Structured finance LEF 3 LEF 2 LEF 1 LEF 3 LEF 10 Strong franchises Shipping 2 Asset finance Aviation 4 -- -- >11 >11 – UK – Europe DCM 7 DCM 1 DCM
Slide 35: A New, Simpler GBM
A New, Simpler GBM Origination and Portfolio Markets Non-Core Coverage Management Americas Asia EMEA Risk, Finance, Operations & Technology, HR, Marketing & Communications Note: Subject to consultation with works councils, regulators and social partners 34
Slide 36: Split between Core and Non-Core
Global Banking & Markets Split between Core and Non-Core Core Non-Core Restructured core Non-Core assets and Core businesses businesses businesses Essential to our clients Re-sized market Distressed asset prices Resilient origination and opportunity and “closed” markets distribution markets
Slide 37: Streamlined footprint, while maintaining global proposition
GBM & GTS International Network Streamlined footprint, while maintaining global proposition Primary countries Australia, China, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Netherlands, Russia, Singapore, Spain, Sweden, UAE, UK, US Refocused countries Austria, Belgium, Brazil, Canad
Slide 38: Geographic Income – GBM
Geographic Income – GBM GBM: FY08 Underlying Revenue £10.2bn RoW Asia-Pacific 2% 14% UK 45% Americas 22% Europe 17% GBM Americas revenue up 28% on an underlying basis to £2.4bn in 2008 Boosted by inclusion of RBS Sempra revenues of £0.4bn Rates, Currencies & Commodities strong Subdued credit
Slide 39: GBM Americas – Opportunities for Growth
GBM Americas – Opportunities for Growth Focus on Core Clients – 800 Corporate Relationships – 300 FI and Public Sector clients Play to our strengths: drive business through our origination and distribution platform – Increased Capital markets activity – pent up demand – M&A opportunities for lar
Slide 40: 2008 Significant Transactions
2008 Significant Transactions Loans: United States In Market United States November 2008 United States October 2008 United States August 2008 Crown Castle Corporation Constellation Energy Group, Inc. Chesapeake Midstream International Paper USD 250,000,000 USD 1,230,000,000 Operating LLC. USD 6,000,
Slide 41: Questions
Questions 16th March 2009
RBS Americas — Citigroup Investors presentation (March 2009) on 6ix