The wealth management arm of UK banking group Royal Bank of Scotland, which includes its flagship Coutts business, saw operating profits rose to £321 million in 2011 from £304 million a year before.

The wealth management arm of UK banking group Royal Bank of Scotland, which includes its flagship Coutts business, saw operating profits rose to £321 million (around $503 million) in 2011 from £304 million a year before. In the last quarter of 2011, profits rose to £96 million from £87 million in the same period a year earlier.

Net interest margins in wealth management rose to 3.59 per cent in 2011 from 3.37 per cent in the previous year, RBS, which is part-owned by the UK taxpayer after the bank was rescued in a massive state bailout three years ago, said today in a statement. Risk-weighted assets in the wealth business fell 1 per cent, year-on-year, to £12.9 billion. Total assets under management stood at 30.9, a rise of 3 per cent over the year. (That figure excludes bank deposits).

The wealth management division employed a total of 5,700 staff at the end of December 2011, up from 5,200 a year earlier.

The division’s cost-income ratio was 71 per cent at the end of last year, up from 70 per cent a year before, making it one of the lowest figures among those disclosed by the major wealth management firms in the recent reporting season. (By contrast, Sarasin, the Swiss bank, has a ratio of more than 80 per cent, as reported today).  

RBS has embarked on a move to reinvigorate its Coutts brand. In January, this publication reported that the bank was launching the second part of its drive to reshape the business. Between 80 and 100 roles may be reduced by Coutts following an extensive consultation period with staff. The move was the next step in the plans for change as outlined last March by Rory Tapner, head of RBS’ wealth division, and follows the UK senior management restructure that took place in September last year.

Among the other changes to the wealth arm announced or implemented last year was a “strategic investment in technology leading to the development of a single global technology platform for the Wealth division”, RBS said in its statement. “The platform was successfully deployed in Adam & Company in 2011 with Coutts UK to follow in 2012,” it added.

Torrid

The London-listed banking empire has endured a torrid period of news headlines in recent months, with much attention focused on the bonus payment that had been destined for RBS chief executive Stephen Hester, although he subsequently declined to accept it due to a firestorm of media and political commentary.

The overall RBS group posted a pre-tax loss of £766 million after charges for payment protection insurance mis-selling compensation and the impact of debt problems in Greece. A number of other UK banks have also had to make substantial payouts connected to the PPI issue.

For the year, the group operating profit was £1.892 billion, up by 11 per cent after adjusting for the disposal of Global Merchant Services at the end of 2010, driven by a strong retail and commercial operating performance and the return to profit of RBS Insurance. Ulster Bank and GBM faced more difficult conditions, leaving total core operating profits at £6.095 billion.

Non-core operating losses in 2011 were 24 per cent lower compared with 2010, despite the acceleration of disposals in the second half of the year, the bank said.  The Core Tier 1 ratio, a key measure of a bank’s financial strength, was 10.6 per cent, compared with 10.7 per cent at the end of 2010.