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LATEST: Coutts International may be sold off, merged or joint ventured
11/08/2014 , John Evans, International Editor

In a strategic restructuring, RBS is considering options for Coutts International, the overseas arm of the British private bank, which could include an outright sale.

RBS will now work with its local management teams across the Coutts and other businesses to explore options for the international operation which could also see it merged into the main private bank or enter into joint ventures, according to sources familiar with the strategy.
 
This follows a review into Coutts carried out by Alison Rose, head of the new commercial and private banking division at RBS. A  key consideration in this process will be to continue the delivery of wealth management capabilities to Coutts UK resident non –domiciled clients with suitable offshore booking support capability, it was stressed.
 
A straightforward sale looks to be the likely outcome, the sources said. It is understood that potential bidders, ranging from institutions from North America to Asia, have already made their interest known in Coutts International.
 
The unit manages about SwFr40 billion of client assets out of its Geneva base.
 
The searching Rose review, according to the sources, confirmed that the Coutts International business should be restructured to align it better with RBS’s own strategic focus on the UK.
 
In addition, RBS in February set a number of targets, including achieving a 15 percent return on equity in each of its business, including a renewed focus on its leading UK market business.  That resulted in the bringing Coutts and other private banking business together with its commercial arm.
 
The Coutts international business represents around 41 percent of customer assets and liabilities and 35 percent of revenues.

While solid foundations have been built over the last three years, RBS faces a challenging path to deliver its strategic plan of ROE plus 15 percent given the dynamics of compressed margins and the increasing need for scale in international businesses, the sources stressed.

Nonetheless, the Rose review supported a “substantial” increase in growing the RBS group’s  UK high net worth business.

The review decided that the UK is at the heart of the RBS Commercial and Wealth businesses and the bank is confident it “can create the leading customer franchise in the UK offering private banking, wealth planning and investment management.”

The UK represents 59 percent of customer assets and liabilities and 65 percent of revenues in our HNW business and is planned to achieve strong ROE, it was noted.  Coutts and Adam & Company have “fantastic brands” and RBS’s HNW ambitions will be built on those.

The new approach to the wealth sector will see Coutts and Adam private banking services serve clients with more than £1 million invested with RBS.  The private wealth segment will aim at clients with £3 million to £10 million with RBS.

In addition, the private office will serve those with £10 million to £75 million.

Finally, the personal and business banking brands, delivered by RBS, NatWest and Ulster Bank, will serve those with £100,000 to £1 million.

This stable and clear operating model will be implemented by a team led by Alison Rose to ensure quick progress is made, the sources noted.

The Wealth Executive Committee will continue to operate in its current form, with Rory Tapner, Coutts CEO, continuing to chair this body and report to Alison Rose.

RBS concludes that its businesses will working together “to offer our customers the very best UK private banking proposition through the most recognised brands in the market.”



 

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