The Strategist

RBS to its foreign clients: Hurry up and find another bank

08/25/2016 - 14:23

Royal Bank of Scotland Group Plc (RBS) asked 3 thousand users of the bank’s global transaction banking services to hurry up with search for other credit institutions.

Peter Skuce
Peter Skuce
RBS has sent an appeal to customers of branches outside the UK and Ireland, and warned that current accounts, cash management and settlement of international trade transactions will not be available after 31 December. The report notes that the bank has been working with 7 th. clients in 32 countries during 18 months to find alternative service provider since RBS itself is going out of business.

RBS decided to give up almost all of the foreign operations and concentrate on the domestic market. Some multinational companies, including Royal Dutch Shell Plc, had to look for other banks as RBS has decided to terminate banking outside the UK and Ireland, Bloomberg reported.

"The deadline is approaching fast," - said Jerry Pearce, Head of Global Transaction Services at RBS. "The majority of customers have already found new banks, or are on the look-out, but there are a few customers who still have much to do", - he added. 

RBS decided to stop banking operations outside the UK and Ireland. Investment in the customer service would be too heavy, yet unprofitable, said the bank's CEO Ross McEwan.

Net loss of British Royal Bank of Scotland (RBS) rose to 2.05 billion pounds in the first half of the year ($ 2.68 billion) amid rising restructuring costs and court fees.

According to RBS itself, the bank's revenues amounted to 6.1 billion pounds, compared to 7.26 billion pounds during the same period last year. 

Net loss of the Edinburgh bank amounted to 1.08 billion pounds ($ 1.4 billion) compared with a profit of 280 million pounds a year earlier. This is more than 247 million pounds’ loss predicted by interviewed experts earlier. 

The negative figures can be explained by 1.28 billion pounds on legal penalties associated with a scandal with wrongfully imposed credit insurance.

Executive Director of RBS Ross McEwan is currently half way through a five-year strategy plan. The manager has to turn one of the world's largest banks into a solely British institution due to the slowing UK economy.

RBS said that the bank is unlikely to achieve its goals by 2019. In addition, the organization previously had to abandon an idea of split-off of consumer bank Williams & Glyn, even though RBS had already spent 1.4 billion pounds on preparations.

In July, RBS and its subsidiary bank Natwest warned they may make customers pay for keeping funds in bank accounts, if the Bank of England reduces the benchmark interest rate to a negative level.

The Bank of England on August 4 cut interest rates to 0.5% per annum to a record low level - 0.25%, and restarted the quantitative easing program.

As reported in a statement issued after the meeting, most of the Central Bank leaders expected to reduce the rate to a level close to zero before the end of 2016

Irish Ulster Bank, RBS’ Division aligned with the Euribor rate, already charges interest on deposited funds of large corporate clients.