Positive Points:
Press speculation suggests that other potential buyers of the branch network business have stepped forward, including Virgin Money.
Speculation that an extension to the European Commission's deadline could be agreed for this particular sale has been heard.
RBS management noted that "the vast majority of work to separate the business from the retained RBS business is complete, in accordance with EC requirements." An independent management team has been appointed, more than 98% of the customers have been moved to new sort codes and account numbers, staff has been moved to separate buildings and separate internet banking channels have already been created.
The bank's board noted that "RBS has either completed or made significant progress on the other European Commission mandated disposals." For example, a part sale of its insurance business Direct Line has recently been completed.
As of its half year results, a financial cushion (capital position) or Core Tier 1 ratio of 11.1% was recorded, compared with 10.8% as of 31 March 2012 and 10.6% at 31 December 2011.
Group loan impairment losses continue to fall. As of its half year results, loan impairment losses fell 34% to £2.7 billion, compared with £4.1 billion in H1 2011. This was driven by a significant reduction in non-core and improvements in Retail & Commercial. In addition, customer deposits grew by £7 billion from a year earlier.
The bank continues to be restructured. By taking action now, retreating to business areas where it has advantage and scale, management are hopefully establishing the foundations for the bank to progress going forward.
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