Royal says no plan to unscrew brass plaque

Sir Howard Davies made the comment when asked whether the change would result in state-backed Royal moving its registered office from Edinburgh to London, or lead to any job cuts in Scotland.

It came on a day shares in Royal plunged nearly seven per cent as investors responded to a gloomy outlook for the economy painted by chief executive Alison Rose, despite unveiling a big rise in profits. The drop wiped £1.9bn from the bank’s stock market worth.

Royal Bank, still 62.4 per cent owned by UK taxpayers further its £45.5 billion bailout during the financial crisis, said it would shift its brass plaque to London if Scotland had voted to become independent ahead of the referendum in 2014.

READ MORE: NatWest chiefs head for the exit at Royal

Asked whether the name change would have any implications for the bank’s Edinburgh base, Sir Howard said: “No, there is not. The registered office remains in Edinburgh, we aren’t unscrewing any brass plaques at this point. As a result of this (name change) there is no change in personnel, so no, it doesn’t have any of those implications.

“We have said in the past, in relation to referendum which we did in 2014 – the policy has not changed – that it would be necessary to look at our location if there were a [vote for] Scottish independence and a separate Scottish central bank et cetera, but not before then. And we have no plans to change that.”

Ms Rose added: “There is no impact on this for our customers or on jobs. Royal Bank of Scotland branch(es) will remain unchanged.”

The bank employs several thousand people at its Gogarburn headquarters on the outskirts of Edinburgh, though board meetings are now split between London and Scotland. While Royal Bank will be phased out as the parent company name, the bank said it will continue to be the trading name for branches in Scotland.

Observers were quick to suggest the change was designed to distance the bank from the scandals which engulfed it following the financial crisis, but bank top brass said it was driven by practical reasons.

READ MORE: Big banks look set for another bumpy year

Sir Howard noted that 80% of customers deal with the group as NatWest, adding that the Royal Bank name had been a “concept” designed for an international group which no longer exists, given the retrenchment it has undertaken.

“Essentially, we are re-aligning the group name with the name under which most people deal with us, and that seems to us to make sense,” he told reporters.

The new strategy unveiled by Ms Rose includes a shake-up of NatWest Markets, its investment banking division, which may lead to job cuts. Ms Rose declined to say how many roles would be at risk from the move, which will see it focus more on corporate and institutional customers, and cut the size of its rates business. NatWest Markets currently has around 5,000 employees.

“Clearly as we become a smaller and simpler bank there will be an impact, but we will always talk to our colleagues first,” Ms Rose said.

Asked whether the bank’s cost reduction drive, which will see it target savings of £250m this year, would affect branches, Ms Rose said she was satisfied that its current estate of 800-plus branches, alongside mobile banks, community bankers, and access points in Post Offices, was the right amount at present. But she said this would be kept under review.

Ms Rose, who succeeded Ross McEwan, presented the new strategy as the bank reported bumper rise in annual profits.

Operating profit before tax climbed to £4.2bn from £3.4bn, though its net interest margin came under pressure, dropping to 1.99% from 2.09% as the base interest rate remains close to all-time lows at 0.75%.

Net impairment losses of £696 million were booked, which the bank said equated to 21 basis points of gross customer loans, compared with 13 basis points in 2018.

With the bank signalling its expectation of a short-term cut to the base rate, Ms Rose said economic growth “remains subdued, compared to its historic trend, and interest rates are likely to be lower for longer.” She added: “This has an impact on our ability to generate net interest income.”

Nicholas Hyett, analyst at Hargreaves Lansdown said: “An imminent name change means recently installed CEO Alison Rose has been quick to stamp her mark on RBS. However, some pretty gloomy guidance suggests she’ll have her work cut out.”

Meanwhile, the bank does not expect any change to the UK Government’s approach to selling down its stake, further to December’s election win for Boris Johnson and this week’s Cabinet reshuffle.

The bank proposed a final ordinary dividend of 3p and a special dividend of 5p.