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Royal Bank of Scotland reveals plans for new structure to comply with UK ring-fencing requirements

Caitlin Morrison
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RBS is restructuring because of new UK banking rules (Source: Getty)

Royal Bank of Scotland Group (RBS) has set out its plans to restructure in order to comply with UK ring-fencing regulations.

Legislation requiring the separation of essential banking services from investment banking services will take effect from 1 January 2019. RBS said today that in order to be compliant with its requirements, "we need to undertake a significant reorganisation of our current legal entity structure and business model".

Shares in the bank were down 4.2 per cent at the open.

At the beginning of 2017, the lender will introduce an intermediate holding company for the ring-fenced banks named NatWest Holdings Limited which, at that time, will assume direct ownership of National Westminster Bank Plc, Adam & Company PLC and Ulster Bank Ireland DAC. NatWest Holdings Limited will initially be a subsidiary of RBS plc, but by the end of 2018, it will be a direct subsidiary of RBS Group plc.

National Westminster Bank Plc will therefore no longer be a subsidiary of the current RBS plc entity, the bank said today - instead, it will be a ring-fenced bank and will continue to operate under the NatWest brand, for personal, private, business and commercial customers in England and Wales and customers in Western Europe. Coutts and Co will continue to serve RBS' private banking customers, also within the ring-fence.

Read more: Ringfencing is the wrong solution to the wrong problem

In Northern Ireland and the Republic of Ireland RBS will continue to operate under the existing Ulster Bank and Ulster Bank Ireland brands and legal entities.

The lender is planning to transfer most of its existing personal, private, business and commercial customers from The Royal Bank of Scotland plc (RBS plc) to Adam & Company PLC, its current Scottish private bank, in mid-2018. On the same day as the transfer becomes effective, Adam & Company PLC will be renamed RBS plc.

At the same time, RBS plc will be renamed NatWest Markets plc "to bring its legal name in line with our recently relaunched brand strategy".

The bank has already announced that it intends to place the majority of its UK and Western European banking business in ring-fenced banking entities under an intermediate holding company.

"Our proposed future structure under the ring-fencing legislation and our brand strategy are key elements of the bank we are becoming," said RBS boss Ross McEwan.

"The future ring-fenced structure of the bank is not only designed to be in compliance with the new regulatory requirements and objectives but will better reflect who we are as a bank and what we stand for: a bank that is focused on its customers."

HSBC boss Stuart Gulliver has previously hit out at the new ring-fencing rules, leading to concerns that the bank might leave the UK altogether, although Gulliver later said the lender's worries had been deal with.

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