FORM 6-K
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
For May
11, 2017
Commission
File Number: 001-10306
The
Royal Bank of Scotland Group plc
RBS,
Gogarburn, PO Box 1000
Edinburgh
EH12 1HQ
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form
20-F X Form 40-F
___
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(1):_________
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(7):_________
Indicate
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 ___
No X
If
"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
6-K:
The Royal Bank of Scotland Group plc
Legal
Entity Identifier: 2138005O9XJIJN4JPN90
Annual General Meeting Statements
11 May
2017
The
Royal Bank of Scotland Group plc will hold its Annual General
Meeting at 2.00 pm 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, Ross McEwan, Chief Executive,
Sandy Crombie, Senior Independent Director and Penny Hughes,
non-executive director at the meeting.
Howard Davies - Chairman
We have
made considerable progress over the last year in putting our past
issues behind us and continuing to build a profitable core bank.
Ross McEwan, our Chief Executive, will provide more detail on our
financial performance and our strategy to make RBS a simple, safe
and more customer-focused bank. You will also hear from our Senior
Independent Director, Sandy Crombie, on the remuneration
resolutions we are asking you to vote on today and from Penny
Hughes, who leads our Sustainable Banking Committee.
Let me
first of all introduce the Board. On my far right is one of the new
members, Frank Dangeard. Frank joined the Board in May 2016 and
brings a wealth of expertise from senior roles across a range of
technology and financial services companies. Next to Frank is Mark
Seligman who joined in April 2017 bringing financial services
knowledge and substantial FTSE 100 Board experience. Next to Mark
is Morten Friis and next to him is Baroness Noakes, the Chairman of
the Board Risk Committee. We then have Brendan Nelson, Chairman of
our Group Audit Committee. Next to Brendan, is Ewen Stevenson, our
Chief Financial Officer. On my immediate right is our Chief
Executive, Ross McEwan, and on my immediate left is Aileen Taylor,
Company Secretary. Next to Aileen is Sandy Crombie, the Chairman of
the Group Performance and Remuneration Committee and Senior
Independent Director. Then we have Penny Hughes, the Chairman of
the Sustainable Banking Committee and next to her is Robert
Gillespie and then Alison Davis. Finally on my far left is Mike
Rogers. A number of our Executive Committee members are also with
us, seated in the auditorium.
I would
like to thank each of my colleagues on the Board for their
continued dedication and determination over the last year. This
bank is in a much better position as a result of their efforts,
although there is still much to do.
I am
pleased to confirm two further appointments today. John Hughes,
until recently, was Head of Banking Audits at KPMG. And Yasmin
Jetha who has had a range of jobs in the financial sector, notably
at Abbey National, and was a member of the shadow Board we set up
for Williams and Glyn, which has now been stood down. Our Board,
like those of other banks, is growing in size as we plan to
implement the government's ring-fencing scheme, which requires
additional layers of governance. After these appointments we will
be broadly in line with the Davies recommendation of at least 25%
women members. We have further changes in planning which would take
us to the Hampton Alexander recommended proportion of one third
during 2017.
Corporate
governance in listed companies generally is changing, and the
outgoing government launched a consultation on further reforms. We
have responded to that consultation, which focuses on efforts to
strengthen the links between Boards and the company's stakeholders.
We do not know what mechanisms the new government will propose. In
the light of that, and having taken legal advice, we took the
decision not to bring forward a proposed resolution to create a
shareholder committee at RBS. We considered this proposal to be
inconsistent with both the law and the company's constitution and
of course it might prove not to be compatible with the Government's
reforms. We are committed to increasing stakeholder engagement and
Penny Hughes will talk more about our work in this area in a few
minutes. We will be running two shareholder events, on 31 July in
London and 30 October in Edinburgh. Anyone interested in attending
can leave their name at the desk in the foyer.
Turning
to the bank's strategy, we were pleased to report a profit of
£259 million for Q1 2017. This was our first bottom line
profit since the third quarter of 2015 and represents a strong
start to the year. Over the year since I last stood before you, the
share price has risen from 216p to 263p, in what has been a
turbulent year for all banks. In fact over that period the RBS
share price has risen more than those of our peers.
But
reporting large losses like the one we took for 2016 is always
difficult. Shareholders suffer most, but the bank's management and
employees also feel the pain. It is important to bear in mind that
this loss reflected £10 billion of one-off provisions as we
sought to conclude as many of our legacy issues as possible, while
continuing to restructure the bank in line with our
strategy.
Our
underlying results demonstrate the progress we are making. For the
future, the Board remains strongly convinced that we are pursuing
the right strategy. The core bank performed strongly despite the
political and economic uncertainty and has now averaged an adjusted
core operating profit of over £1 billion for each of the last
nine quarters.
Unfortunately,
we expect to take further significant one-offs in 2017 -
particularly related to conduct and litigation charges and
restructuring - leading to a bottom line loss at the end of the
year, before targeting a return to profitability in
2018.
Reporting
a bottom line profit for 2018 would be a huge milestone for the
bank, after what will, by then, have been ten extremely tough years
of losses.
As we
move along this path to profitability, there are still a number of
issues we need to resolve, in particular Williams & Glyn and
Residential Mortgage Backed Securities.
On
Williams & Glyn, it became clear following the EU referendum
that the stand-alone challenger bank we were creating would
struggle to secure a banking license from the PRA in a low interest
rate environment. As a result, we started to look at a number of
alternative options to meet our state aid obligations. The Treasury
and the European Commission are currently consulting on a new plan
which would achieve the same competition objectives more quickly
and with greater certainty. We now await the conclusion of those
consultations and a formal decision by the European Commission. I
hope that we can reach an agreed solution later in the
year.
On
Residential Mortgage Backed Securities, we await resolution of the
US Department of Justice's investigation into securitisations we
sold in 2007. I regret to say that on that I have nothing new to
report. It is our strong intention to put this behind us during
2017, but the timing is out of our hands.
There
has, however, been progress on some of the other key conduct and
litigation issues facing the bank. We have reached settlement with
shareholders representing around 87% by value of the total claim in
the 2008 Rights Issue shareholder litigation. The settlement does
not constitute any admission of liability by the bank, but allows
us to minimise material litigation expense and management
distraction. If we do not reach settlement with the remaining
claimants, we will defend ourselves vigorously when the trial
starts on 22 May. The bank has been criticised for the cost of
defending itself and paying the legal costs of defending our former
directors, who have been named as co-defendants in the action. The
costs we are having to meet are high because of the extraordinary
breadth and complexity of the case. And it is normal practice under
company law, and indeed it is a legal obligation for the bank, that
directors should be indemnified in relation to any third party
civil legal action arising from their tenure at the
bank.
The FCA
investigation into our former Global Restructuring Group continues,
although the regulator has published an update summarising the
conclusions reached by the Skilled Person appointed to review the
bank's actions. We have acknowledged shortcomings in GRG and have
taken two important steps - an automatic refund of complex fees and
the establishment of a new complaints process overseen by a former
High Court judge - to put things right for customers who did not
receive the level of service they should have received, or would
receive now. Importantly however, the FCA update recognised that
all businesses transferred to GRG were in financial difficulty,
that RBS did not inappropriately target businesses for transfer and
that, in a significant majority of cases, it is highly unlikely
customers suffered material financial distress as a result of the
bank's actions. We continue to co-operate with the FCA and await
the publication of its final report.
Turning
briefly to wider economic issues, 2016 was for the UK a year of
solid growth with low inflation. The growth in our business
reflected that, though in Scotland the economy was broadly flat
which in part, reflected a slowdown in onshore oil activity
following the fall in the oil price. 2016 also saw the UK decide to
leave the European Union. The exit process has now been triggered
but it will be a while before we see the implications for future
financial regulation. Given the shape of our business, and its
largely domestic focus, RBS will be less impacted than many of its
peers. Our aim is to ensure continuity of service for our EU
customers and we are actively exploring options to allow us to do
so.
One
potentially significant outcome of the vote to leave the EU is that
we might also be facing a second Scottish referendum. Before the
last referendum, we said that RBS would continue its support for
Scotland but would move its registered office to London. If there
is a second referendum we will keep you informed of any contingency
plans we might put in place.
Ross McEwan - Chief Executive
I know
a £7 billion bottom line loss is extremely tough for you to
bear as shareholders, however this loss does reflect significant
progress in putting our legacy issues behind us.
Howard
referenced the £10 billion of one-off charges:
●
Litigation and
conduct costs of nearly £6 billion,
●
restructuring costs
of just over £2.1 billion,
●
payment of the
final DAS dividend to The Treasury of £1.2
billion,
●
Capital Resolution
disposal losses and impairments of £825 million and £300
million deferred tax asset impairment.
It's a
long list, but we said 2015 and 2016 would see the bulk of the
heavy lifting.
I stood
here a year ago and said that by 2017 we would have moved into the
third phase of our strategy - where we increase our focus on
serving our customers better and returning this bank to sustained
profitability.
We
announced at our Full Year Results that we are hoping to do that in
2018, subject to resolving the two key issues that are holding us
back the most: Williams & Glyn and our RMBS litigation in the
US.
I'm
sure this is welcome news to our shareholders.
I
believe that we are finally shifting from the bank we were to the
bank we are becoming. We still have a lot more to do but we are
making progress and our strategy is working - as Howard said, we
averaged an adjusted core operating profit of over £1 billion
for the last nine quarters.
Our
ambition absolutely remains to be #1 for customer service, trust
and advocacy by 2020 and our priorities also remain the same. We
believe that this ambition will create a very good bank for our
shareholders.
In 2016
we made solid progress against all of our financial
targets:
1) We
ended the year with a strong CET1 ratio of 13.4%, this has since
moved to 14.1% after Q1 2017.
2) We
took a further £985 million of operating costs out last year
(against a target of £800m). This is the third year running we
have exceeded our cost target and this brought our adjusted Cost to
Income ratio down from 72% to 66%.
3) The
business is growing well in the markets we like: net lending growth
in our Personal & Business Banking, and Commercial &
Private Banking franchises was 10%, well ahead of target with
particularly strong growth in mortgages (up 12%), personal
unsecured loans (up 7%), and lending to small businesses (up 6%) -
that is despite not competing on price or changing our risk
appetite.
4) On
our customer metrics: the March 2017 NatWest NPS score was the
highest seen since we started to track it in 2009 and Commercial
Banking is a market leader for customer advocacy. We still have a
lot to do to increase service in many other parts of our business
as we strive to become the number one bank for
customers.
5) 2016
was another tough year for our colleagues, as we continue to
reshape the bank. I am grateful for their determination in serving
our millions of customers, day-in, day-out, despite many negative
headlines, and the considerable restructuring we have done to the
business that affects their role.
We've
had a good start to 2017 and you will have seen at our Q1 results
announcement two weeks ago that we delivered a bottom line profit
of £259 million - our first since Q3 2015 - and an adjusted
core operating profit of £1.3 billion.
The
plan we set out in 2014 is working. Our ambition and priorities
remain. This year we will continue to focus on:
●
Strengthening our capital position (maintaining a core capital
ratio of over 13%),
●
Improving
our Customer Promoter Scores and closing the gap to number
one,
●
Taking out a
further £750 million of operating costs in 2017 - In fact
we're going to take out £2 billion over the next 4 years by
removing complexity - and get this bank back in shape for
shareholders, customers and colleagues alike,
●
Growing our
fantastic franchises, which are valued by our customers, in our
chosen markets.
As
Howard has already mentioned, we, along with the wider industry,
are facing a number of common political, economic and regulatory
challenges. In addition, one of the biggest changes we need to
respond to is the growing customer shift to digital, online and
mobile. Through all of these challenges we have to remain focused
on our customers, and be there for them, when they
want.
More
customers than ever want to do their banking online or on the move
with their mobile. We interact with our customers over 20 times
more through digital channels than physical ones. That's why we're
investing £1 billion this year in technology, innovation and
security.
For
example, our award winning mobile banking app, as voted for by
customers, is updated regularly to give customers even greater
functionality. We've introduced 1,200 TechXperts to our branches to
help customers use our technology more effectively.
We've
also made good advances in the lending process for small business
customers - they can now see their pre-approved lending limit via
online banking, and then apply in under 10 minutes, and receive
funds within two working days.
We've
introduced video meetings with some of our specialist advisors,
allowing customers to connect with us from the comfort of their own
home. We've introduced a self-service investment platform called
'NatWest Invest' for people who know what they want and who don't
need advice. For small business customers, we've introduced Esme,
an online lending platform for loans between £5k and
£150k that can process and fund loans within the
hour.
This
change in customer behaviour impacts how they want to be served.
With one of the largest branch networks of any UK bank, the branch
will continue to be part of our offering to customers - alongside
call centres, online banking, our app, mobile branch vans which
reach over 630 communities every week and the 11,500 post office
branches. But the nature of the branch will change. It will be
where people go to meet with our expert advisors, when they have a
more complex query or have a need for specialised
advice.
You
will be only too aware that this bank has been on a long and
challenging journey - and I am only too aware that this has tested
the patience of shareholders and colleagues alike.
This
bank is now showing its potential:
●
the core bank is
strong,
●
we have great
franchises, supported by strong brands, and
●
we believe that by
going further on cost reduction and faster on digital
transformation we will deliver a simple, safe and even more
customer-focused bank, with a compelling shareholder investment
case.
Sandy Crombie - Senior Independent Director
As Ross
says, we are building a simple, safe bank that is truly focused on
customers. To do that, we need to ensure that remuneration and
incentives for our colleagues - regardless of level - are aligned
to our values and the culture of the bank we are trying to
build.
The
current Directors' Remuneration Policy expires at today's
AGM.
As
Chairman of the Remuneration Committee, I would like to provide a
summary of our new remuneration policy for Directors. This is
proposed for approval by shareholders under resolution 2 in the
Notice of Meeting.
The
Committee has spent a great deal of time considering evolving views
on executive pay. This includes potential reforms by the UK
government and calls from investors for companies to develop more
tailored policies. We started the process over a year ago and have
taken great care in developing a construct that aligns with our
strategy, the long-term interests of shareholders and new
regulatory requirements, while still being sufficiently attractive
to executives.
Our
current remuneration arrangements include a number of adaptations
to meet various challenges faced at RBS over recent years. These
have led to a degree of complexity and lack of alignment with the
bank RBS has become. The Committee believes the time is right for a
new, simpler approach, developed specifically to align with RBS's
culture and our thinking on pay.
We are
therefore proposing a number of changes as part of our new
Directors' Remuneration Policy.
The
Committee has been looking to develop a plan that aligns executives
with shareholders predominantly through long-term shareholding. It
also aims to discourage the potential for excessive risk-taking
through being built around more meaningful and achievable
performance tests.
Therefore
the shareholding requirements for executive directors will rise
significantly, from 250% to 400% of salary for the Chief Executive
and from 125% to 250% of salary for the Chief Financial
Officer.
The
maximum long-term incentive award will be reduced by up to 40%, in
line with the growing consensus on the need to restrain executive
pay.
As now,
there will be a single long-term incentive, with no annual bonus.
Performance tests are designed around factors more within the
control of management, encouraging safe and secure growth within
risk appetite. The plan incentivises executives to deliver
performance against targets in the year prior to grant, over the
three years prior to vesting, and then to continue increasing the
share price. Shares will be released between four and eight years
following grant.
While
it is intended with the proposed construct to remove some of the
uncertainty and unpredictability inherent in traditional LTIPs, the
new variable element of pay is still subject to rigorous
performance assessment. Underperformance or risk failings would
lead to a proportionate reduction of awards, or cancellation in the
case of significant issues. Overall, we have removed a significant
degree of 'upside' through reduced award levels while the potential
for downwards adjustment remains in place.
Another
change is that long-term incentive awards will not be subject to
pro-rating for good leavers. One factor in this decision is the
regulatory restriction which has the effect of preventing long-term
incentive awards being granted in the first year of employment. In
addition, RBS is unusual in having no annual bonus for executive
directors. Applying pro-rating where the construct is solely based
on long-term incentive awards means that no variable pay can be
awarded in respect of the final year of employment.
We
believe the removal of pro-rating is appropriate in our particular
circumstances. It also ties in with the long-term aims of our
policy, helping to ensure individuals are motivated right up to the
point of departure as well as creating a higher level of
shareholding that persists for up to eight years post departure.
It's very important that executives can be held accountable for,
and are financially exposed to, the long-term consequences of their
actions.
The
changes also ensure that executives can, on average, during the
entirety of their tenure, earn broadly what they could under the
previous policy. This is necessary to ensure that we can continue
to attract and retain high calibre executives.
Regulatory
developments have also been taken into account. There are longer
deferral periods and clawback can be operated for up to ten years
if payments are not justified. Given that variable pay for
executive directors at RBS is delivered solely in long-term
incentive awards, our construct is much longer term than both
minimum regulatory requirements and the market norm.
A
further change is that the pension allowance for new executive
directors will be reduced from 35% to 25% of salary. This brings
the rate closer to that of the wider employee population and more
in line with peers as well as FTSE100 companies.
A
thorough consultation process has been undertaken during the
development of the proposed policy. And feedback from our major
shareholders has been taken into account in the final
design.
I would
like to thank shareholders who participated in the consultation and
my fellow Committee members for their constructive comments and
support while developing the new proposals.
You may
be aware of the press commentary following the publication of proxy
advisor reports, in particular the recommendations against the new
remuneration policy by ISS and PIRC. We disagree with the
conclusions reached in these reports and strongly challenged the
view from ISS that the level of discount was insufficient under the
new construct.
We
subsequently re-engaged with a number of our major shareholders,
and I am pleased to say that the vast majority indicated their
continued support for our proposals. In addition, Norges Bank, one
of our major shareholders, has recently issued a public statement
confirming support for the new policy highlighting the simplified
structure and reduced maximum award levels. They also commended the
Board's "willingness to challenge conventional thinking on
remuneration".
In
summary, we believe that the policy encourages sustainable
long-term performance, is strongly aligned with shareholders both
during and after employment, and, while offering reduced maximum
pay, will be more highly valued by executives.
It is
also aligned with some of the emerging guidance from investors on
pay. A number of investor guidelines now accept that, in the right
strategic context, long-term shareholding can be an appropriate
alternative to conventional long-term incentive plans.
RBS
has, since the financial crisis, been a market leader in showing
restraint in executive pay and in seeking to move away from the
unintended consequences of highly geared financial
incentives.
We
believe we have designed a construct that builds on this approach,
delivering a remuneration structure that is simpler and longer
term, with significantly reduced maximum award levels.
I hope
that all shareholders will support the new remuneration policy at
today's AGM.
Penny Hughes - non-executive director
Becoming
the best bank for customers' means building a sustainable bank.
That means staying connected to our customers' needs and the wider
expectations of all of our stakeholders.
As
chairman of the Sustainable Banking Committee, I wanted to
demonstrate the commitment we have to listening to the stakeholder
voice. This is not a new initiative - the Committee has run a
proactive engagement programme for several years, inviting over 50
external stakeholders to challenge the most senior decision makers
in RBS.
We
believe this represents best practice amongst FTSE
Boards.
While
there are established channels for engaging with shareholders via
our Investor relations programme and retail shareholder events, the
SBC has targeted a broader range of stakeholders. Over the past
couple of years our guests have included: think-tanks, academics,
investors, journalists, charities, civil society groups, government
bodies, consumer groups and enterprise organisations.
It's a
healthy dialogue - the purpose is to listen and understand where
RBS could do more. It supports our efforts to create a simple,
safe, more customer-focused Bank.
So what
sorts of topics do we discuss at these sessions?
During
2016 we have covered a wide range of issues including:
●
How to support
successful start-up customers' scale-up to the next level. To help
generate ideas we've heard from Entrepreneurial Spark, which
supports start ups; Accelerate which helps small companies expand;
and the UK Crowd Funding Association, talking about alternative
sources of finance.
●
How to use
technology to promote financial capability and help customers with
personal finances. We've had great input from the Financial
Inclusion Commission and Money Advice Trust who have a real insight
into the needs of vulnerable customers and Fintech companies who
have innovative tools to help customers analyse spending patterns
and improve creditworthiness.
●
How to drive a good
culture so our people are focused on sustainable customer outcomes.
For this we've engaged with diverse organisations including
Tomorrow's Company, the Banking Standards Board and Great Place to
Work, as well as hearing from our own RBS Future Leaders
Group.
But it
is more than dialogue. A number of actions have been implemented as
a direct result of listening to stakeholders.
You'll
see behind me that RBS has been accredited by the Royal National
Institute for Blind People for having an accessible mobile app for
blind and partially sighted customers.
An "act
now" text alert service has been introduced to help customers
manage their money.
There
are over 400 accredited Women in Business specialists in the UK who
offer specialist expertise in supporting women in
business.
More
recently RBS has launched Boost - a free advice and expertise
service for small businesses regardless of whether they bank with
us or not.
Of
course interaction with stakeholders is much wider than formal
engagement sessions - it happens across the bank every
day.
I'm
delighted to be able to highlight a couple of areas where good
progress has been made. Ross has already mentioned some of the
progress for customers let me briefly comment on other
stakeholders.
For our
employees - being inclusive and valuing diversity is a key focus.
RBS has retained its position as a Times Top 50 employer for women
and achieved Top 5 ranking in the Bloomberg Global Gender Equality
Index. The wellbeing of our colleagues is really important to us
and great efforts are being made to create a great place to work
and build a healthy culture.
RBS
supports a variety of employee groups - known as 'Employee Led
Networks'. The networks are made-up from volunteer employees who
play a key role in delivering, raising awareness of, and
influencing our bank-wide inclusion strategy.
The
networks also provide an avenue for focused personal development,
as well as numerous networking opportunities for their
members.
For the
environment - RBS is committed to reducing its environmental impact
and has already outperformed its 2020 targets - reducing carbon by
20%, water by 5% and paper by 50%. I think these are achievements
to be proud of. But we can always go further, at our last
Sustainable Banking Committee meeting, we reviewed our increased
ambitions for this year.
Recognising
the importance of getting engagement right, the Sustainable Banking
Committee's programme of engagement continues to evolve. Plans for
this year include front line customer engagement and the
opportunity to observe consumer panels, as well as our topic
focused engagement sessions.
We
discussed this at the Sustainable Banking Committee just last
month, having consulted with a number of stakeholders to develop
our thinking. We plan to build on existing, good activity and
report on it more widely to demonstrate progress to you. We will
also be reviewing proposals which emerge from government and will
look to continue to demonstrate best practice on the stakeholder
front.
Important Information
Certain
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.
In
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.
Other
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 2016. 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
the foregoing.
The
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.
The
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
instruments.
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THE
ROYAL BANK OF SCOTLAND GROUP plc (Registrant)
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By: /s/
Jan Cargill
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Name:
Jan Cargill
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Title:
Deputy Secretary
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11 May
2017