Ross McEwan, group chief executive of the Royal Bank of Scotland, has set out a strategy that will tie Coutts more closely to the wider bank’s business customers.
‘Wealth is a good example of a business that we can improve,’ McEwan said, claiming Coutts had the UK’s highest assets under management in the wealth sector and ranked second by number of clients. ‘Coutts has excellent credentials but revenues have been flat over the last 12 months and returns have declined.’
Income at Coutts slipped by 7% from £1.17 billion in 2012 to £1.09 billion last year, while the business’s return on equity fell from 13% to 12%. McEwan (pictured) is targeting a return on equity above 15% for Coutts.
To achieve this, Royal Bank of Scotland has restructured from seven divisions into three roughly equal lines: Coutts will sit within Commercial & Private Banking.
‘As well as deepening relationships with existing customers, we want to do more to connect our wealth managers with the wealth creators, who own and run the businesses as well as connecting them to our retail banking offers,’ McEwan explained. ‘We may be big, but we are actually not the best in the marketplace at doing this business.’
McEwan argued that ‘making Coutts part of Commercial & Private Banking offers excellent potential to leverage deep customer relationships’, and added that ‘we need to better connect Coutts with the successful business owners’.
In this space, McEwan touted the bank’s dominant presence. He stated that the Royal Bank of Scotland had the greatest market share among the small and medium-sized enterprises that generate half of all private-sector turnover in the country, dealing with 1.2 million small businesses each day.
McEwan also highlighted the bank’s increasing activity in the area: new loan approvals were up by 39% in the final quarter of last year compared with the same period of 2012, and were 14% higher than in the previous quarter; and gross lending jumped by 21% over the fourth quarter of 2012 and by 12% over the third quarter of 2013.