RBS unveils brand changes, new structure in ring-fencing revamp

Royal Bank of Scotland is to separate its retail operations from its higher-risk businesses in a major overhaul to meet new ring-fencing rules in Britain, which also means the RBS brand will only be used in Scotland.

Ring-fencing aims to avoid a repeat of the 2008 financial crisis, when banks' bad bets threatened ordinary depositors' cash, leading to big taxpayer-funded bailouts. The rules apply to all banks in Britain that have both retail and commercial or investment banking activities.

State-backed RBS said on Friday NatWest would become its main retail brand in England, Wales and western Europe, while its historic Royal Bank of Scotland name, which dates back to 1727, will be for Scotland only.

The shake-up reflects RBS's latest effort to rebuild its reputation after the bank's reckless lending and a takeover spree on the eve of the financial crisis threatened to topple the UK financial system. "Our proposed future structure under the ring-fencing legislation and our brand strategy are key elements of the bank we are becoming," Chief Executive Ross McEwan said in a statement.

"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," he said.

RBS's shares were down 1.8 percent at 173.9 pence at 0845 GMT amid a sell-off in banking shares across Europe.

"NatWest has a better net promoter score - a measure of customer satisfaction - than RBS so it makes sense to use the brand with the better profile in England and Wales," Shore Capital analyst Gary Greenwood said. He said it would be harder to ditch the RBS name in Scotland where NatWest has never really been used.

RBS, which is 73 percent owned by the British taxpayer, is the latest bank to announce how it plans to reform its business to comply with the ring-fencing changes, recommended by the Vickers Commission in 2011.

HSBC has outlined similar plans including the relocation of its UK business to Birmingham last year, while Barclays has carved its business into two core divisions, including Barclays UK, to comply with the new rules.

RBS said its new ring-fenced bank would be called NatWest Holdings, comprising its core NatWest, Royal Bank of Scotland, Coutts & Co, Ulster Bank Limited and Ulster Bank Ireland DAC brands.

The legal entity of its private bank, Adam & Company, will be renamed Royal Bank of Scotland Plc as part of the changes. Its Corporate and Institutional Banking business will be called NatWest Markets and will form the non ring-fenced bank, together with the bank's Channel Islands operations.

The group holding company will remain Royal Bank of Scotland. Under the rules, banks' ring-fenced businesses, which will be funded and capitalised separately, must include UK retail banking and small business customers and most simple banking transactions. Big global corporate customers and most investment banking activities must be held in a separate entity.