Natwest Group Plc · LSE:NWG

Natwest — The Royal Bank of Scotland Group — Investor Day (November 2015)

44 slides from Natwest's investor day presentation, Nov 12, 2015

  1. Slide 1: RBS Investor Seminar: Corporate & Institutional Update

    RBS Investor Seminar Corporate & Institutional Update London, 12 November 2015 0

  2. Slide 2: Speakers

    Speakers Chris Marks Alison Rose CEO, CIB CEO, CPB Mark Bailie © Richard Place CEO, Capital FD, CIB Resolution

  3. Slide 3: Agenda

    Agenda Chris Marks, CEO, CIB 1 CIB and CPB working together Alison Rose, CEO, CPB Chris Marks, CEO, CIB 2 CIB Go-Forward1: Restructure Richard Place, Finance Director, CIB 3 CIB Capital Resolution2: Exit Bank Mark Bailie, CEO, Capital Resolution 1. CIB Go-Forward is referred to as CIB GF through out

  4. Slide 4: Note of caution

    Note of caution Please note: The future structure and activities of RBS, including the CIB Go-Forward business and non ring-fenced bank (or NRFB) outlined in this presentation, remain subject to a number of uncertainties. These include, among others, final ring-fencing rules (expected in 2016), futu

  5. Slide 5: Market Context – Challenging macro environment and regulatory uncertainty remains

    Market Context – Challenging macro environment and regulatory uncertainty remains UK and Eurozone Interest Rates1 – Low for longer? Regulatory uncertainties remain2 2015 2016 2017 2018 2019  CRD IV LCR  Volcker Reporting  MiFID 2 / MiFIR  Fundamental  Ring-fencing in the UK  Volcker live for b

  6. Slide 6: Key messages

    Key messages A leading UK and Western European business Executing a multi-year restructuring and transformation across CIB Making good progress winding down Capital Resolution Planning for ring-fencing Focused on delivering sustainable returns 5

  7. Slide 7: CIB and CPB working together

    CIB and CPB working together Working together CPB1 CIB GF2 Large Corporate Financing & Risk Trading & Banking solutions Flow Sales Supporting customers Helping customers to Pricing and distributing with lending, optimising raise money from capital risk, sourcing liquidity What we do their working ca

  8. Slide 8: CIB and CPB working together – Built around strong products

    CIB and CPB working together – Built around strong products Excellent credentials… We raised c.£50bn of money for customers Leader UK Large Corporate Banking leader1 £50bn in Debt Capital Markets3 We have relationships across FTSE 100 We managed the largest liability 95% Largest companies4 managemen

  9. Slide 9: Corporates – Continued UK leadership

    Corporates – Continued UK leadership Leadership across UK Corporates1 Supporting UK Companies Leading the biggest strategic across all their needs transactions (Market Penetration, %) (Jul’15) (Aug’14) 95 Leading UK Banks 90 RBS c£7.7bn UK Corporates - (Turnover >€2bn) 85 Loans, High Yield Bonds & A

  10. Slide 10: Corporates – A longstanding presence in Western Europe

    Corporates – A longstanding presence in Western Europe Western Europe proposition Delivering the biggest liability Biggest Helping liabilityto access customers management exercise in management newexercise markets ever Europe in Europe (Sept’15) (May’15) NW FI SW EUR 6.5bn (equiv.) DK Across 9 EUR a

  11. Slide 11: Financial Institutions – A focused and well diversified customer base

    Financial Institutions – A focused and well diversified customer base Strong FIC-led FI franchise Consistently supporting Helping customers to the UK to raise money access new markets (Jul’15) (May’15) UK US JP  The fourth time RBS has been  RBS helped Aviva re-open the mandated by UK DMO and acte

  12. Slide 12: Agenda

    Agenda Chris Marks, CEO, CIB 1 CIB and CPB working together Alison Rose, CEO, CPB Chris Marks, CEO, CIB 2 CIB Go-Forward: Restructure Richard Place, Finance Director, CIB 3 CIB Capital Resolution: Exit Bank Mark Bailie, CEO, Capital Resolution 11

  13. Slide 13: CIB restructuring – Building the bank of the future

    CIB restructuring – Building the bank of the future Reshaping the front-line Re-engineering the business Targeting sustainable returns Planning for ring-fencing 12

  14. Slide 14: CIB restructuring

    CIB restructuring Revenue Adjusted Costs3 £bn £bn ~65% ~75% 3.9 3.6 ~1.4 0.7-0.8 20141 CIB Target2 20141 CIB Target2 Funded Assets Country Footprint £bn European branches ~65% -25 241 38 ~80 9 4 20141 CIB Target2 20141 CIB Target2 8-10% RoE target4 1. 2014 financials represent legacy CIB division; a

  15. Slide 15: Reshaping the front-line – Simpler model and focused customer footprint

    Reshaping the front-line – Simpler model and focused customer footprint Automated and high High value add 3 core business lines volume UK and European Global focus Financing Large Corporates Investor ~2k customers Rates and trading FI Customers counterparties ~350 Currencies ~1.5k CPB Large Corporat

  16. Slide 16: Reshaping the front-line – Well connected and product engine for the rest of the bank

    Reshaping the front-line – Well connected and product engine for the rest of the bank Services Customers Brands Currencies Rates Financing Retail Wealth SME / Mid-cap Large Corporates2 1. Current connectivity may not be indicative of future connectivity. See note on page 3. 2. Large Corporates repre

  17. Slide 17: Reshaping the front-line – Three strong CIB business lines

    Reshaping the front-line – Three strong CIB business lines (£bn) CIB Go-Forward 9M’15 FY’15 revenue revenue1 1.0 guidance 1.3 Financing Rates Currencies 9M’15 revenue 0.3 0.5 0.3  Top 3 UK and Sterling house3  Tier 1 Rates house in UK and  Tier 1 FX product in UK and Europe2 Europe2  Strong Euro

  18. Slide 18: Reshaping the front-line – At the forefront of technology development

    Reshaping the front-line – At the forefront of technology development Agile Markets FX Micropay Automation of Sales and Trading  Digitising customer experience  Enabling global on-line trade  Shifting customers from voice to e (FX e-trading as a % total trading volume) c85-90% c25%  Servicing th

  19. Slide 19: Reshaping the front-line – Building an engaged work force

    Reshaping the front-line – Building an engaged work force Engagement1 Leadership1 Living our values1 +1% +6% +6% 2014 2015 2014 2015 2014 2015 1. Engagement, Leadership and Living Our Values index for CIB based on internal staff survey (October 2015). 18

  20. Slide 20: Re-engineering the business – Making it simpler

    Re-engineering the business – Making it simpler Simplified structure Number of products1 Total CIB as at 2014 -67% Products Markets GTS DCM Coverage Regions EMEA APAC US CIB 2014 CIB GF Services & Functions Number of committees1 CIB Go Forward -79% Business Financing & Risk Trading & Flow Sales line

  21. Slide 21: Re-engineering the business – Maximising efficiency

    Re-engineering the business – Maximising efficiency Re-platforming CIB infrastructure Infrastructure cost base Number of applications ~75% ~90% Current CIB GF Target Current CIB GF Target  Replacement of legacy processes and systems with new, simpler platform  Supporting a simplified business cent

  22. Slide 22: Re-engineering the business – Improving our control environment

    Re-engineering the business – Improving our control environment Building a strong control environment Number of internal reconciliations Number of interfaces ~95% ~85% Current CIB GF Target Current CIB GF Target  Regulatory change more difficult to respond to with current system configuration  Red

  23. Slide 23: Re-engineering the business – A strong track record

    Re-engineering the business – A strong track record Targeting sustained cost reduction1 Delivery mechanisms £bn Next 3 years targeted Last 3 years delivered • Sustained momentum ~2.0 • Skill set to deliver transformation 1.7 • Detailed cost diagnostics and multi- year plan • Committing investment to

  24. Slide 24: Targeting to deliver sustainable return

    Targeting to deliver sustainable return  Revenues in the CIB Go-Forward business reflect stable customer activity and in-line with 1 Revenue guidance  Detailed cost planning is advanced; 2 Costs − Targeting a CIB cost base of ~£0.7-0.8bn − Clear approach to deliver cost savings across front office

  25. Slide 25: Revenue – Stable revenue performance despite recent market headwinds

    Revenue – Stable revenue performance despite recent market headwinds CIB Go-Forward Revenues (£bn) YTD’15 revenues of £1.0bn 0.6 0.4 0.4 0.4 0.3 0.3 0.2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2014 2015  Revenues underpinned by customer demand and tracking management guidance  Q3’15 performance stable QoQ despite ch

  26. Slide 26: Costs – Plan to deliver c£2.0bn reduction to our cost base

    Costs – Plan to deliver c£2.0bn reduction to our cost base CIB Adj. costs1, £bn CIB CR ~£2bn cost reduction targeted in CIB GF 3.6 CIB over next 3 years 0.5 CIB CR 1.7 CIB GF 1.9 CIB 9M’15 CIB CPB transfers Regions UK Front Re- UK Functions CIB Target 20142 cost out front to back Office Platforming

  27. Slide 27: Costs – Actions defined to deliver our plan

    Costs – Actions defined to deliver our plan Regions front  Downsizing / Exit of countries in CIB Capital Resolution to back  Cost reduction expected to be substantially completed by 2018  Front office re-alignment and simplified coverage model UK Front  Trade flow optimisation; increase business

  28. Slide 28: Balance Sheet – RWA and Funded Asset reduction tracking plan

    Balance Sheet – RWA and Funded Asset reduction tracking plan CIB Go-Forward1 (£bn) RWAs Funded Assets -8% -43% 33 ~31 139 ~30 ~119 ~80 2014 9M 2015 CIB Target 2014 9M 2015 CIB Target  RWAs in line with CIB Go-Forward end state target however uncertainty around final capital rules and regulation  A

  29. Slide 29: Planning for ring-fencing and CIB NRFB entity

    Planning for ring-fencing and CIB NRFB entity RBS Group plc1 CIB NRFB entity planning RBS  CIB NRFB to act as product Ring-Fenced CIB International engine for the rest of the bank Bank NRFB2 NRFB2  Well capitalised entity with an RBS plc legal investment grade credit rating entity3  Action plan t

  30. Slide 30: Agenda

    Agenda Chris Marks, CEO, CIB 1 CIB and CPB working together Alison Rose, CEO, CPB Chris Marks, CEO, CIB 2 CIB Go-Forward: Restructure Richard Place, Finance Director, CIB 3 CIB Capital Resolution: Exit Bank Mark Bailie, CEO, Capital Resolution 29

  31. Slide 31: Track record of legacy asset reductions

    Track record of legacy asset reductions £bn Third Party Assets1 Risk-Weighted Assets2 RBS Non-Core RCR2 £230bn Third Party Asset (TPA) On track to achieve TPA reduction reduction achieved target a year ahead of schedule 258 137 171 230 123 142 47 41 28 29 14 6 FY’08 Reduction FY’13 Q2’13 Reduction Q

  32. Slide 32: CIB CR – Downsizing / exiting countries to refocus on UK and Western European businesses

    CIB CR – Downsizing / exiting 34 countries to refocus on UK and Western European businesses What we started with (December 2014): Key asset classes: Markets; Global Transaction Services; Portfolios = Exit countries = Go-Forward countries / hubs £1.7bn 2014 cost base1 £64bn RWA £93bn funded assets 1

  33. Slide 33: CIB CR – What is it?

    CIB CR – What is it? Slow Portfolios Shipping Global Transaction Services EMEA Portfolio Markets Americas Portfolio Bubble size = Dec-14 RWA APAC Portfolio (£4bn RWA shown) Natural RWA Run-down Markets Global Transaction Services Fast Low Indicative Operational Complexity / Tail Issues High 32

  34. Slide 34: CIB CR – Exit Strategy

    CIB CR – Exit Strategy Strategic Overview 2015 2016 2017 2018+ 1  Three stage strategy: Capital Out – Early removal of assets and release of capital 2 – Systematic reduction of cost Cost Out base as operational activity is reduced – Management of legacy 3 issues where acceleration is Clean-up infea

  35. Slide 35: Capital Out – Progress to date

    Capital Out – Progress to date Slow Portfolios Key Achievements to date Shipping Global Transaction Services EMEA Markets  Good progress made in Q3 2015, with Portfolio Bubble size = Dec-14 RWA the sale of North American loan Americas (£2bn RWA shown) Portfolio portfolios to Mizuho largely complete

  36. Slide 36: Capital Out – Progress to date

    Capital Out – Progress to date £bn, RWA Full Year 2014 Q3 2015 45% Markets 51% 28.9 19.8 1% Other RWA Shipping RWA RWAs 7% £39bn 64.1 4.4 2% 38.7 4.4 11% GTS EMEA 17% 11.1 6.6 6.8 17% 2.9 11% 2.4 2.0 7% APAC Americas 6% 5% 4.2 7.8 7% 12% Portfolios Global Transaction Services Markets Other 35

  37. Slide 37: Capital Out – Outlook

    Capital Out – Outlook £bn Funded 92.9 Assets RWA 64.1 50.5 13.9 38.7 FY’14 Reduction Q3’15 RCR1 Planned 2018 (Q3’15) Reduction Disposal Losses £0.2bn ~£1.3bn Total = ~£1.5bn 1 RCR shows Risk-Weighted Asset Equivalents (RWAe). An internal metric that measures the equity capital employed in divisions.

  38. Slide 38: Cost Out and Clean-Up

    Cost Out and Clean-Up Costs Out Clean-Up & Tail Management  Removal of £1.7bn annual cost base is key  Essential to reduce complexity across all objective for CIB Capital Resolution businesses and portfolios, including:  Cost reduction contingent on removal of GTS – Closure of remaining SPVs and

  39. Slide 39: Key messages

    Key messages A leading UK and Western European business Executing a multi-year restructuring and transformation across CIB Making good progress winding down the Capital Resolution Planning for ring-fencing Focused on delivering sustainable returns 38

  40. Slide 40: Q&A

  41. Slide 41: 40

    40

  42. Slide 42: Speaker Biographies

    Speaker Biographies  Appointed CEO of CIB on 28th Feb 2015 and appointed to RBS  Date of Appointment - February 2015 ExCo in April 2015  In 2010 Mark returned to RBS as Head of Non-Core Solutions, where  Appointed Co-CEO of the newly created RBS Capital Resolution he led a number of key transact

  43. Slide 43: Speaker Biographies

    Speaker Biographies  Alison Rose is the Chief Executive of the RBS’s Corporate,  Appointed Finance Director of CIB in July 2015. Commercial & Private Banking business and joined the Coutts Board  Prior to this role Richard was CFO, then COO, of RBS APAC, on 1 October 2015. She is a member of the

  44. Slide 44: Forward Looking Statements

    Forward Looking Statements Certain sections in this document contain ‘forward-looking statements’ as that term is defined in the United States Private Securities Litigation Reform Act of 1995, such as statements that include the words ‘expect’, ‘estimate’, ‘project’, ‘anticipate’, ‘believe’, ‘should

The Royal Bank of Scotland Group — Investor Day (November 2015) on 6ix