SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
File Number: 001-10306
Royal Bank of Scotland Group plc
Gogarburn, PO Box 1000
of principal executive offices)
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
20-F X Form 40-F
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(1):_________
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(7):_________
by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.
"Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-
The following information was issued as Company announcements
in London, England and is furnished pursuant to General Instruction
B to the General Instructions to Form
The Royal Bank of Scotland Group plc
Annual General Meeting Statements
30 May 2018
The Royal Bank of Scotland Group plc will hold its Annual General
Meeting at 2.00pm today. The meeting will deal with the proposed
resolutions as set out in the Notice previously issued to
shareholders. The following is an extract from the remarks to be
made by Howard Davies, Chairman, and Ross McEwan, Chief Executive,
at the meeting.
Good afternoon ladies and gentlemen and welcome to the 2018 Annual
General Meeting of our Company and to our headquarters here at
Over the past year, we have seen the bank move closer to achieving
sustainable profitability, reporting our first bottom-line profit
for a decade and making very good progress in putting our major
legacy issues behind us.
Our Chief Executive, Ross McEwan, will update you shortly on our
financial and strategic performance as well as our future targets
and investment in digital and innovation but I will open by saying
a few words from a Board perspective.
We have one new face on the stage this year. Dr Lena Wilson who
joined on 1 January. Lena brings strong commercial and public
sector experience, having previously served as the Chief Executive
of Scottish Enterprise and as a Senior Investment Advisor to the
Also with effect from 1 January, Sandy Crombie stepped down from
the Board. Sandy was, as Senior Independent Director, a great
support to my predecessor and to me. Penny Hughes will also be
standing down from the conclusion of this meeting. Penny has led
the Remuneration and latterly the Sustainable Banking Committee
with great skill and enthusiasm. We wish them both well for the
future. Following Sandy's departure, Mark Seligman has
become the Senior Independent Director.
Following our announcement this morning, Ewen Stevenson our CFO
will be leaving the business but he will stand for re-election
today as he will remain on the Board. The effective date of Ewen's
departure will be confirmed in due course.
Yasmin Jetha joined the Board in 2017, however, as planned she
stepped down on 30 April of this year to hold the position of
Non-executive Director on the boards of our Ring-Fenced Bank
Entities. So Resolution 10, which recommended Yasmin's appointment,
is no longer required and will be withdrawn.
We have also announced that Patrick Flynn will be appointed to the
Board and to the boards of our Ring-Fenced Bank Entities, with
effect from 1 June. Patrick's banking experience, latterly as Chief
Financial Officer of ING Group, will further strengthen the
I would like to thank each of my colleagues on the Board for their
continued dedication and determination over the past year. This
bank is in a much better position as a result of their
I am pleased to say that the additional layers of governance
required to implement the Government's ring-fencing scheme are now
In April, we announced changes to the composition of the Boards of
our ring-fenced entities and the creation of a Board for NatWest
Markets plc, which will be outside the ring-fence. These changes
included a number of external appointments who will not join the
Group Board. With the majority of the bank sitting within the
ring-fence, I will chair the Boards of both the Group and the
ring-fenced entities - subject to your approval, of course - while
Frank Dangeard has been appointed Chairman of the NatWest Markets
The weekend after our first quarter Results was a significant
moment, as we completed various transfers to implement our
These changes will allow us to continue to serve our customers with
little or no change to their day-to-day banking. It was a hugely
complex piece of work though it went largely unnoticed, which is a
testament to the hard work of our staff.
Turning to the Bank's performance, the share price increased more
than 20% in 2017, outperforming our UK banking peers. With our
first full-year profit in a decade followed by a £792m
bottom-line profit for the first quarter, the strength of this
business is beginning consistently to show through. We welcomed
last year's Treasury announcement that it will restart the
privatisation process by the end of March next year.
We recently announced that we have reached a settlement in
principle to pay the Department of Justice in the US $4.9bn to
resolve its investigation in relation to past subprime mortgage
activity. This was a significant milestone for our bank. The size
of the settlement, while at the lower end of analyst expectations,
is a stark reminder of what happened to RBS in its past, when it
focused too heavily on its global ambitions.
The bank, its shareholders and the British taxpayer have paid a
heavy price for those poor decisions. The scale and culture of the
bank is of course much changed today.
The settlement, when finalised, will remove the last major hurdle
to paying dividends to our shareholders. But dividends remain
subject to regulatory approval. We have always said that any
dividend payments will start small and grow incrementally. In my
view, that remains the most sensible approach.
Aside from RMBS, we have made progress on, or resolved, all of the
other legacy issues I talked to you about last year.
We have improved the funding position of our main defined benefit
pension scheme by making a £2bn payment before the end of next
year and up to £1.5bn of further payments linked to future
capital distributions. The new payments substantially address the
Fund's historical funding weakness. The central expectation of both
RBS and the Pension Fund Trustee is that no further deficit
contributions to the Main Scheme will be required.
Last September, the European Commission agreed to revise the terms
of our European State Aid obligations, replacing the need to divest
the business formerly described as Williams &
The new scheme involves the creation of a capability fund to
benefit challenger banks, alongside incentivised transfers of some
of our small business customers.
The Treasury recently announced the independent body designed to
implement the package. This solution brings to an end an issue that
has weighed heavily on the bank for a number of years.
The 2008 Rights Issue litigation has also been resolved. The
settlement announced last June brought the proceedings to an end
with no admission of liability and was a positive outcome for the
The year also saw the publication of the FCA's section 166 report
into the actions of our Global Restructuring Group from 2008 -
The report confirmed the summary findings that had been published
previously by the FCA and that the most serious allegations made
against the bank were not upheld.
However, it made for very difficult reading for us and highlighted
the many areas where we could have done better for
We have apologised for these mistakes and taken steps to put them
right. In November 2016, we announced an automatic refund of
complex fees and a complaints process overseen by an Independent
Third Party, retired High Court Judge, Sir William Blackburne,
which the FCA confirmed were appropriate steps. The refund of
complex fees took place last year, with around £115m of offers
made to customers. We have now received a total of 1,344 eligible
complaints and have issued 647 decisions. 137 customers have
appealed to Sir William.
In his latest report, Sir William was positive about the quality of
the decision making and the steps we have taken to speed up the
process. He has also now agreed in principle to extend his
oversight of the complaints process to include an independent
appeals procedure for consequential loss claims.
We have today published details of changes to the scheme and have
also named the Prince's Trust as the charity set to receive
payments as a result of the bank's decision not to benefit from any
money it receives as creditor for an upheld complaint.
You will be aware that a resolution has been requisitioned by a
small number of shareholders to create a shareholder committee. It
is the unanimous recommendation of the Board that our shareholders
reject this resolution. The concept of a shareholder committee was
one idea presented in the Government's Green Paper on Corporate
Governance Reforms but was dropped following a lack of support
during the consultation.
The Board shares the concerns raised by the Government in response
to the consultation and does not consider that the creation of such
a committee would be in the best interests of the Company. It is
the role of the Board, directly elected by shareholders, to promote
the success of the Company for the benefit of its members as a
whole. The Board has made a considered effort to listen to the
views of all shareholders and to build on our existing channels of
engagement, as evidenced by the retail shareholder events held this
year in Glasgow and Birmingham.
You may also have noticed that yesterday we announced changes to
our lending policies in relation to the energy sector. I know this
an issue close to many of your hearts. As of now, the bank will not
provide project-specific finance to:
coal fired power stations
Unsustainable vegetation or peatland clearance
Nor will it provide finance to:
companies generating more than 40% of their revenues from thermal
companies generating more than 40% of their electricity from
We want to help build a cleaner, more sustainable economy for the
future, and these policy changes form part of our broader approach
to this significant challenge.
To close, I would like to emphasise that the bank's strategy is
working. Ross and his leadership team continue to have the full
support of the Board. This has been a landmark year for RBS;
the end of a decade-long journey to return this bank to
Good afternoon everyone, and thank you for joining us here today
for our Annual General Meeting.
When we set out our strategic plan in 2014, our ambition was to
create a UK and Republic of Ireland focused bank that was strong
financially, would give good returns to its shareholders, but most
importantly, was focused on our customers' needs.
Although we have more to do, 2017 represented a year of significant
progress towards this ambition.
In February, we reported a profit before tax of £2.2 billion
and our first full year bottom line profit in ten years, of
£752 million. We've built on this performance this year and
reported a first quarter bottom line profit of £792 million,
which is more than three times that of Q1 2017. Our operating
profit of £1.2 billion was up 70% on the same quarter last
We have achieved this through growing our income, whilst reducing
costs. Four years ago, we set cost reduction targets which many
deemed unachievable. With the commitment of all colleagues we in
fact beat those targets, taking our total cost reduction since 2014
close to £4 billion. The cost base has now improved with a
cost to income ratio of 60.5% at Q1 2018 - although this is still
higher than it should be.
This strong financial performance is supported by lending growth in
key markets. In 2017, we grew net lending across our PBB and CPB
franchises by £6 billion.
This lending helped many of our customers achieve their home
ownership ambition, while our commercial bank's lending supports
hundreds of thousands of jobs throughout the UK.
In the first three months of 2018, our growth has slowed as our
Commercial Bank exits some exposures which don't deliver acceptable
returns for shareholders, and our Personal Business reacts to the
intense competition currently underway in the UK Mortgage Market.
To be clear - we will grow in 2018, but we will do so safely,
within our risk appetite, at levels which generate sustainable
returns. And we will continue to improve our financial
After the additional funding for the main scheme pension fund, and
the agreement in principle with Department of Justice, our pro
forma Q1 2018 common equity tier 1 capital ratio was 15.1%, up 390
basis points on 2014.
Taken all together, 2017 was a very strong year. We are firmly
putting the past behind us - and this is most evident in the
substantial progress in resolving our legacy
Howard has already mentioned the significant milestone we have
reached in our settlement in principle with the DOJ.
In recent weeks we've also moved a step closer to reaching a final
deal on our stake in the Saudi Bank, Alawwal. Once this is complete
it will strengthen our capital position even further.
This is in addition to a number of other legacy issues we have
divested of Citizens, the largest US bank IPO in
repaid the Dividend Access Share, thereby normalising our capital
reshaped NatWest Markets to focus on rates, currencies and
the non-core part of our International Private Banking business,
and wound up Capital Resolution.
received approval for an alternative remedies package for the
business that was formerly known as Williams &
I'm proud of the teams who have worked tirelessly to resolve these
issues - equally, I'm all too aware that they act as a very stark
reminder of what happened to this bank before the financial
I would like to reiterate Howard's comments in relation to our past
activity in GRG and once again apologise to those customers for
whom we were not there when they needed us most.
Any financial services business must always hold two things - its
financial strength and its reputation. We lost both of these - we
fell the furthest - but we have also changed the most.
We are a different bank now.
Looking ahead to 2018/19, the outlook for UK GDP growth is subdued,
relative to the rate achieved in previous years. With forecast UK
GDP growth at or around 1.5%, we expect our balance sheet growth to
follow a similar trend.
Against this economic backdrop, we are confident our strategy
remains the right one. A key pillar of this is responding to the
way customers choose to bank with us.
The pace of change here is most evident in our Personal and
Business Banking business. Since 2014, we have seen total payment
volumes grow by 5%, yet during this time:
transactions are down 36%
transactions are down 35%
All of the growth in our payments volumes has come from digital
platforms. Customers are using our digital channels at an
unprecedented rate and this has meant that we have had to take the
hard decision to close a number of branches.
We realise this is difficult for our customers, it is difficult for
our colleagues, and for the communities who have grown up with
these branches. But we must respond to changing customer
Here in Scotland, for example, we have 1.75 million personal
customers and 120,000 businesses. We value all of them. This
is why we will continue to invest in our 94 branches in Scotland,
our online services and our mobile van stops. There's telephony,
Video Bankers, Community Bankers, Business Growth Enablers, ATMs,
and we partner with 1,400 Post offices. Every community where we
are closing a branch will be served by at least one of our
face-to-face services. Our offer to customers is now better and
more diverse than it has ever been.
Banking is changing and we need to rise to the challenge. If
we don't we will fail - and that isn't good for our customers, and
certainly not good for our long term future.
2018 will be another big year for us on our path to achieving our
2020 goals. On these we have retained our cost:income ratio target
of sub 50% and return on equity of +12%. These are critical to
driving returns for you, our shareholders.
As well as our financial goals, we have retained our stretching
ambition to be No.1 for customer service, trust and
We will achieve this through delivering innovative solutions to our
customers. Making their banking simpler and safer - with a lower
cost, technology-led operating model. Our innovation agenda is, and
will remain, front and centre - and we have made some really good
In Personal and Business Banking we've eliminated paper from our
mortgage process. With this, we are now able to complete the offer
process in less than half the time than before, from 23 working
days to 11 on average. And we can still do better than
We have transformed our business lending approvals process.
Business customers can now self-serve and get a loan of up to
£50,000 unsecured, within our risk appetite, in 24
Finally, in our Commercial Banking business, more than 90 percent
of our new commercial customers can now access our self-service
account opening processes - saving significant time compared to
applying over the telephone.
These are just a few examples of the innovation underway across the
organisation. With all of our focus now on 2020 and beyond, we will
deliver more innovative solutions for our customers as we strive to
be the no.1 bank.
2017 was a year of substantial change for the bank, particularly as
we become a smaller, more efficient organisation. Despite this, our
latest employee engagement scores have shown we have improved in 7
out of 9 categories since our previous survey, and remain above the
global financial services norm in all main categories. This ten
year high for staff engagement is testament to our resilient and
determined colleagues - every day they are focused on rebuilding
the bank and putting our customers first.
Our culture is changing for the better as well. I'm proud of the
external recognition we received in 2017 as we strive to be an
organisation where our colleagues are able to bring their whole
selves to work each day.
We are committed to having more women in senior positions - in 2015
we set a target to have at least 30% of roles at the three most
senior levels in the organisation filled by women, by 2020. We're
now at 37% and we're on track to achieve 40% by 2020 - ahead of
many other organisations. We've still got a way to go, particularly
on our gender pay gap and our targets on senior positions held by
our Black, Asian, and minority Ethnic colleagues - but myself and
the Board, remain steadfast to bringing further balance to
Before I conclude, I would like to add my own thanks to Ewen
Stevenson for his contribution over the last few years. He
has played an important role in delivering much of the progress I
have outlined today, and has been a fantastic CEO for this
It has been a significant year in our story.
We still have more to do, but;
strategy is working.
balance sheet is stronger, our financial performance improved, and
colleague engagement at an all time high.
path to sustainable profits and rewarding you, our shareholders, is
getting much clearer and much closer.
sections in this presentation 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', 'intend', 'plan', 'could', 'probability', 'risk',
'Value-at-Risk (VaR)', 'target', 'goal', 'objective', 'may',
'endeavour', 'outlook', 'optimistic', 'prospects' and similar
expressions or variations on these expressions.
particular, this presentation includes forward-looking statements
relating, but not limited to: The Royal Bank of Scotland Group's
(RBS) restructuring which includes the separation and divestment of
Williams & Glyn, the proposed restructuring of RBS's CIB
business, the implementation of the UK ring-fencing regime, the
implementation of a major development program to update RBS's IT
infrastructure and the continuation of its balance sheet reduction
programme, as well as capital and strategic plans, divestments,
capitalisation, portfolios, net interest margin, capital and
leverage ratios and requirements liquidity, risk-weighted assets
(RWAs), RWA equivalents (RWAe), Pillar 2A, return on equity (ROE),
profitability, cost:income ratios, loan:deposit ratios, AT1 and
other funding plans, funding and credit risk profile; litigation,
government and regulatory investigations RBS's future financial
performance; the level and extent of future impairments and
write-downs; including with respect to Goodwill; future pension
contributions and RBS's exposure to political risks, operational
risk, conduct risk and credit rating risk and to various types of
market risks, such as interest rate risk, foreign exchange rate
risk and commodity and equity price risk. These statements are
based on current plans, estimates, targets and projections, and are
subject to inherent risks, uncertainties and other factors which
could cause actual results to differ materially from the future
results expressed or implied by such forward-looking statements.
For example, certain market risk disclosures are dependent on
choices relying on key model characteristics and assumptions and
are subject to various limitations. By their nature, certain of the
market risk disclosures are only estimates and, as a result, actual
future gains and losses could differ materially from those that
have been estimated.
factors that could adversely affect our results and the accuracy of
forward-looking statements in this presentation include the risk
factors and other uncertainties discussed in the Annual Report and
Accounts 2015. These include the significant risks for RBS
presented by the outcomes of the legal, regulatory and governmental
actions and investigations that RBS is subject to (including active
civil and criminal investigations) and any resulting material
adverse effect on RBS of unfavourable outcomes (including where
resolved by settlement); the uncertainty relating to the referendum
on the UK's membership of the European Union and the consequences
of it; the separation and divestment of Williams & Glyn; RBS's
ability to successfully implement the various initiatives that are
comprised in its restructuring plan, particularly the proposed
restructuring of its CIB business and the balance sheet reduction
programme as well as the significant restructuring required to be
undertaken by RBS in order to implement the UK ring fencing regime;
the significant changes, complexity and costs relating to the
implementation of its restructuring, the separation and divestment
of Williams & Glyn and the UK ring-fencing regime; whether RBS
will emerge from its restructuring and the UK ring-fencing regime
as a viable, competitive, customer focused and profitable bank;
RBS's ability to achieve its capital and leverage requirements or
targets which will depend on RBS's success in reducing the size of
its business and future profitability; ineffective management of
capital or changes to regulatory requirements relating to capital
adequacy and liquidity or failure to pass mandatory stress tests;
the ability to access sufficient sources of capital, liquidity and
funding when required; changes in the credit ratings of RBS or the
UK government; declining revenues resulting from lower customer
retention and revenue generation in light of RBS's strategic
refocus on the UK the impact of global economic and financial
market conditions (including low or negative interest rates) as
well as increasing competition. In addition, there are other risks
and uncertainties. These include operational risks that are
inherent to RBS's business and will increase as a result of RBS's
significant restructuring; the potential negative impact on RBS's
business of actual or perceived global economic and financial
market conditions and other global risks; the impact of
unanticipated turbulence in interest rates, yield curves, foreign
currency exchange rates, credit spreads, bond prices, commodity
prices, equity prices; basis, volatility and correlation risks;
heightened regulatory and governmental scrutiny and the
increasingly regulated environment in which RBS operates; the risk
of failure to realise the benefit of RBS's substantial investments
in its information technology and systems, the risk of failing to
preventing a failure of RBS's IT systems or to protect itself and
its customers against cyber threats, reputational risks; risks
relating to the failure to embed and maintain a robust conduct and
risk culture across the organisation or if its risk management
framework is ineffective; risks relating to increased pension
liabilities and the impact of pension risk on RBS's capital
position; increased competitive pressures resulting from new
incumbents and disruptive technologies; RBS's ability to attract
and retain qualified personnel; HM Treasury exercising influence
over the operations of RBS; limitations on, or additional
requirements imposed on, RBS's activities as a result of HM
Treasury's investment in RBS; the extent of future write-downs and
impairment charges caused by depressed asset valuations;
deteriorations in borrower and counterparty credit quality; the
value and effectiveness of any credit protection purchased by RBS;
risks relating to the reliance on valuation, capital and stress
test models and any inaccuracies resulting therefrom or failure to
accurately reflect changes in the micro and macroeconomic
environment in which RBS operates, risks relating to changes in
applicable accounting policies or rules which may impact the
preparation of RBS's financial statements; the impact of the
recovery and resolution framework and other prudential rules to
which RBS is subject the recoverability of deferred tax assets by
the Group; and the success of RBS in managing the risks involved in
forward-looking statements contained in this presentation speak
only as at the date hereof, and RBS does not assume or undertake
any obligation or responsibility to update any forward-looking
statement to reflect events or circumstances after the date hereof
or to reflect the occurrence of unanticipated events.
information, statements and opinions contained in this presentation
do not constitute a public offer under any applicable legislation
or an offer to sell or solicit of any offer to buy any securities
or financial instruments or any advice or recommendation with
respect to such securities or other financial
Legal Entity Identifier: 2138005O9XJIJN4JPN90
ROYAL BANK OF SCOTLAND GROUP plc (Registrant)