Royal bank of Scotland to rebrand as NatWest amid cuts

Royal Bank of Scotland’s CEO Alison Rose. (REUTERS File Photo)
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Updated 15 February 2020

Royal bank of Scotland to rebrand as NatWest amid cuts

Royal Bank of Scotland’s (RBS) new Chief Executive Alison Rose unveiled a new strategy for the taxpayer-backed bank on Friday, including radically cutting back the size of its loss-making investment bank and renaming the company NatWest.

Rose, who replaced former CEO Ross McEwan in November to become the first woman to lead one of the UK’s major banks, is hoping a rebrand will help rehabilitate the lender’s image after years of scandals following a £45 billion taxpayer rescue during the 2008 financial crisis.

Although the RBS brand will live on in Scotland, the bank will stop using the 293-year-old name at group level and adopt the NatWest brand that grew out of National Westminster Bank, which RBS bought in 2000, and which consistently polls as more popular in customer satisfaction surveys in Britain.

The new strategy and better-than-expected profits were, however, overshadowed by a lower than expected eight pence dividend, sending shares down 6 percent in morning trading and demonstrating the challenge Rose faces to win over investors.

The payout will amount to £1 billion ($1.3 billion) including a £600 million windfall for taxpayers, who still own 62 percent of the bank.

RBS Chairman Howard Davies told reporters the bank’s preference was to use excess capital to buy back stock from the government as and when it restarts selling following the March 11 budget.

Rose’s strategy includes plans to halve investment bank NatWest Markets’ risk weighted assets to £20 billion.

She added that making the bank a greener entity would be a top priority to help tackle “one of the defining issues of our generation,” following similar strategy updates by BP and Blackrock in recent weeks.

RBS will stop financing coal power stations by 2030, and aim to be carbon positive by 2025.

Analysts took a dim view of the update, with KBW saying there was “no end to the building site” at RBS and the outlook was “horrible.”

“We believe investors will be disappointed with capital return,” said Joe Dickerson, an analyst at Jefferies.

The lender reported pre-tax profits of £4.2 billion for 2019, 24 percent higher than 2018 and above analyst expectations.

Results were dented by a loss of £121 million at NatWest Markets and a previously announced £900 million compensation provision for mis-sold insurance, part of a wider industry scandal.

Oil slumps more than 4% on coronavirus fears

Updated 28 February 2020

Oil slumps more than 4% on coronavirus fears

  • Traders fret about impact of spreading virus on crude demand, particularly from China

LONDON: World oil prices tumbled by more than 4 percent on Thursday, as traders fretted about the impact of spreading coronavirus on crude demand, particularly from key consumer China.

Brent oil for April delivery tanked almost 4.2 percent to $51.20 per barrel, while New York’s WTI crude for the same month dived nearly 5 percent to $46.31.

“Concerns that the virus will prompt a global slowdown, weaker consumer confidence and reduced travel has raised concerns about lower demand, weighing on prices,” said CMC Markets analyst Michael Hewson.

Investors are growing increasingly fearful about the economic impact of the new coronavirus or COVID-19 outbreak. 

The virus continues to spread meanwhile, with Brazil reporting Latin America’s first case, and Denmark, Estonia, Greece, Georgia, Norway and Pakistan following suit.

Around 2,800 people have died in China and more than 80,000 have been infected. There have been more than 50 deaths and 3,600 cases in dozens of other countries, raising fears of a pandemic.

The spread of the virus to large economies including South Korea, Japan and Italy has raised concerns that growth in fuel demand will be limited. 

Consultants Facts Global Energy forecast oil demand would grow by 60,000 barrels per day in 2020, a level it called “practically zero,” due to the outbreak.

US President Donald Trump sought to assure Americans on Wednesday evening that the risk from coronavirus remained “very low,” but global equities resumed their plunge, wiping out more than $3 trillion in value this week alone.

“The negative price impact would intensify if the coronavirus were declared pandemic by the World Health Organization, something that looks imminent,” said PVM Oil Associates analyst Tamas Varga.

“The mood is gloomy and the end of the tunnel is not in sight – there is no light ahead just darkness. Not even a refreshingly positive weekly US oil report was able to lend price support.”

Gasoline stockpiles dropped by 2.7 million barrels in the week to Feb. 21 to 256.4 million, the Energy Information Administration (EIA) said on Wednesday, amid a decline in refinery throughput. Distillate inventories fell by 2.1 million barrels to 138.5 million.

US crude oil stockpiles increased by 452,000 barrels to 443.3 million barrels, the EIA said, which was less than the 2-million-barrel rise analysts had expected.

The crude market is watching for possible deeper output cuts by the Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+.

“Oil is in freefall as the magnitude of global quarantine efforts will provide severe demand destruction for the next couple of quarters,” said Edward Moya, senior market analyst at OANDA. 

“Expectations are growing for OPEC+ to deliver deeper production cuts next week.”

OPEC+ plans to meet in Vienna on March 5-6.