RBS SHARES jumped yesterday as the bank revealed its bad loan levels had fallen by around £800m, as its new strategy of focusing on the UK alone has started to pay off.
The bank has sold off or shut down its overseas ventures, most recently selling a chunk of its US bank Citizens.
As a result, the UK’s economic recovery is driving a big financial improvement at RBS.
As well as chopping back overseas ventures, chief executive Ross McEwan promised to focus on existing customers rather than trying to grow by attracting new ones.
“Our strategy is a very simple one – to do more business with the customers we already have, rather than relentlessly pursuing new customer groups,” McEwan told the Bank of America Merrill Lynch conference on banking and insurance.
“Placing new customers ahead of rewarding existing ones was the approach RBS took for many years and it led us to acquire new customers in new markets at a very fast rate, and ultimately it left us with a complex, costly and confused business.”
But McEwan added that the bank’s legacy problems were still far from over. His presentation noted that the “timeline and potential extent” of the foreign exchange benchmark manipulation investigations were “still to be clarified”.
And RBS still has £5bn of restructuring costs to cover from 2014 through to 2017 as the bank seeks to cut its cost base from £13bn last year to £8bn in 2017 – to around 50 per cent of its revenues.
RBS’ shares jumped four per cent on the decline in bad debts, before ending the day up 2.1 per cent.