Executive Summary

This report aim to review the Corporate Governance structure and PESTEL analysis of  Royal Bank of Scotland PLC (RBS). Its organizational hierarchy, governance, Board and its committee members, its Non-executive directors will remain the critical portion for discussion.  Our analysis will contain the importance of PESTEL analysis and factors which affect the RBS PLC structure. The RBS is a Public Limited Company that is a bank that exists in the United Kingdom. Savings deposits, credit cards, leases, mortgages, insurance, shares, investing, money transfers, and online banking services are among the bank’s financial goods and services. The Royal Bank of Scotland provides services to private businesses, trusts, and foundations all over the country.  

Introduction

The RBS PLC is the largest retail and industrial bank in England. It is one of NatWest Group’s retail banking subsidiaries. This bank is consisting of Network of around 700 branches across Scotland. The majority of its presence is in Scotland, covering several towns and cities of England’s and Wales. The RBS headquartered in Edinburgh established 32 years before its current position. In 2019 & 2020, the bank became a NatWest Holdings subsidiary after ring-fencing its primary domestic market (Maklan, Antonetti and Whitty, 2017). The investment management arm of the Group is NatWest Markets. The previous RBS corporation was renamed NatWest Markets in 2018 to grant it legal form.  At the same period, Adam and Company (which had a different PRA banking license) were renamed The RBS PLC, with Adam and Company continuing as an RBS private banking brand in Scotland. Drummond and Child & Co. companies in England.

Task # 1    Governance and Structure of RBS PLC

Governance

The Corporate Governance Board Structure  consists of the Chairman, 2 Managing Officers, and 8 other directors who do not hold executive positions. Out of these directors, two are Independent Directors. The Board is jointly and severally liable for fostering the long-term development of the RBS PLC, employing prudent and appropriate controls to help with risk assessment and management. The board and committee assessment has been recently completed by the Company Secretary in 2020 (Dermine, 2013). The Chairman and executive directors consult with the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) daily. Specific directors often consult with our Financial daily through constant evaluation and practical commitment sessions. Board Member are consist of .

Non-executive director independence

The Chairman is appointed among the independent and non-executive directors governed under the Code of Corporate Governance UK. The responsibilities included Board members to discuss financial and non-financial the firm’s health and viability, including protection and soundness. At RBS PLC, It is the board member’s primary responsibility to organize themselves & maintain strict corporate ethics principles. The Board shall carry out corporate governance assessment to foster the tone from the top and foster a transparency, where applicable. Further Non-executive director at RBS PLC is responsible for the design, content and frequency of management’s presentations to the Board to fulfil its duties and responsibilities and strive to assess the success of Directors and valuable feedback on an ongoing basis.

Chairman and Chief Executive Officer

At RBS PLC, the Chairman is different from the CEO because there are well-defined boundary. The Chinese wall concept in their roles as the Chairman heading up with the company every day. The CEO behaves in compliance with the authority assigned by the Group Boards. The CEO is in charge of the group’s overall direction, planning strategies, formulating the group’s mission and developing the group’s community (Siepel and Nightingale, 2014). The Chairman and Chief Executive Officer’s responsibilities are to lead for the customer management of the group by delivering on all aspects of the Service Offerings, both operational and non-operational. He must set, manage, push and execute the overall group agreed strategic strategy, thereby enabling us to deliver sustainable market success and successful consumer results on behalf of the RBS PLC. They must ensure local group and/NWH participation with customers, authorities, government agencies and appropriate external stakeholders and analysts.

Senior Independent Director

Responsibilities of Senior Independent Directors include availability as a guide for Board but act as an agent on behalf of other Directors and perform the periodic assessment of the Chairman’s progress. Senior Independence Directors must review the quantity and adequacy of services for the Chairman’s office. At RBS PLC, SIDs was open to the shareholders to address any questions they may have had. They can serve as a listener on behalf of the Chairman and work as an intermediary when called upon. If there are issues, they are often open to shareholders for discussion.

Changes to the Board or committee

In the past two years, RBS PLC has a farewell to 2 directors who have been with us for many years. Alison Davis left the Board of Directors on 31-Mar-2019, and Baroness Noakes resigned on 31-July-2019. Yasmin Jetha rejoined the Board of the RBS PLC in the spring of 2018 after being named in the summer of 2017. During the year, Yasmin Jetha was named to the Board of Directors on 1st-April-2020 for different sub committees related to innovation, technology and sustainability.  

On 1st-August-2020, Morten Fri became Risk Committee for Risk Management and joined the Board’s Nomination Committee.  Lena Wilson retired from the committee on 31st–March-2020. However, he joined the group performance and risk remuneration committee on 1st April-2021. Further, he became a member of the Board on 1st-August-2020.  Robert left the Sustainable Banking Committee on 31 July 2020 and began serving on the Audit Committee on 1 August-2020 as a replacement.

Task # 2    Importance of PESTEL Analysis for an organization

PESTEL analysis is a tool for reducing market risks by proactive preparation. Firms can achieve practical benefits by analyzing Global, Financial, Societal, Technical, Legal and Environmental Influences. The analysis will benefits in the design process, product creation, product launch, content marketing strategy (Dinçer and Pınarbaşı, 2020). Cost-effectiveness, a better knowledge of the industry, alertness to potential risks  maximize prospects are all PESTEL research benefits. We will go into each one in greater depth.

PESTEL Cost-effectiveness

A PESTEL analysis has just one cost: time. Although additional services may assist in the organization of input and suggestions, the PESTEL review may be done using a single text or pen and paper.

PESTEL analysis is also easy. It is up to how much testing you do, how much time you invest, and how much do PESTEL analysis with business. However, the expense of performing some degree of research is not subject to adjustment. The most significant thing is that everyone may do a PESTEL study. While a team can achieve superior outcomes, a person can still effectively complete the study.

PESTEL Deeper understanding

Environments that actively and indirectly impact the company will go overlooked without a PESTEL review. When creating a product concept, for example, it can forget protection and consumer rules (Song, Sun and Jin, 2017). Alternatively, might be ignorant of the technical challenges that consumers in rural areas encounter concerning customers in more heavily developed areas. Alternatively, even though the product is famous in its current climate, selling it to the other side of the world might be a financial catastrophe.

PESTEL analysis enables analyzing many diverse and influential variables that can determine product releases’ performance. It facilitates critical thinking to achieve a greater understanding of strategic strategy.

Alertness development

PESTEL may be used to evaluate organizations in general, but it can also be used to analyze individual goods, marketing campaigns, and consumer relationships. PESTEL analysis may raise knowledge of potential risks, mainly when used in new technologies inside the business if it is a present rival, a future competitor, or one of their goods. For example, if a city’s population can increase by 15%, this can help the company. However, if the spike is predominantly made up of older citizens, and the target demographic is between the ages of 20 and 30, this may be an incentive to enter a new consumer with a new product. Will closely analyze improvements and establish a strategy to mitigate any benefit improvement or harm using PESTEL analysis. Without it, the organization might be faced with an unwanted danger.

Exploit opportunities

External opportunities are popular. Opportunities may be discovered and utilized to improve a firm’s market by utilizing a PESTEL analysis to study external conditions (model). For example, if used PESTEL analysis to investigate social and technical patterns, it could find that the target group is gravitating toward a new social networking platform (Pu et al., 2021). This is the chance to build a publicity plan ahead of rivals. A good outreach campaign helps to turn these consumers into buyers ahead of the competition.

Decision-based PESTEL

Another aim of the PESTEL analysis is to include research reports to the organization on the environmental world and how it can influence the company’s functions and operations. The business’s behaviour after a PESTEL study is solely based on these Research Findings.

Strategic Planning

The macro-envoirmental factors such as internal and external condition effects the organizational strategic planning. A company’s strategic planning is driven not only by internal and external considerations but also by macro-environmental factors. Pest analysis, also known as PESTEL analysis, is a method that searches and analyzes environmental variables such as political, economic, social and technical factors. These aspects have an effect on the company as well as the practices and procedures of the enterprise. PESTEL Identification companies and entities with further identifying these details and proactive preparation.

Task # 3    PESTEL Framework of RBS PLC

The PESTEL review offers an outstanding description of the different problems faced in the company’s day-to-day operations. The Royal Bank of Scotland (RBS) would face other than competitive factors in a prevailing macroclimate. For example an enterprise might be extremely productive, with a clear development trajectory, but it will be of little value to the Royal Bank of Scotland if it were located in an uncertain political climate. PESTEL combines the facts of political, economic, social, technical, environmental and legal aspects. I have selected political and economical impact over RBS for discussion.

Political Factors

The management of RBS PLC believes that Profits increased dramatically due to poor economic and political conditions. However, due to Brexit, RBS has set aside 100 million in reserve funds. Thus, approximately 13 billion (or 6.7 billion) of assets and liabilities have been transferred to the Amsterdam office in the UK, the backup arrangements. The RBS revealed that their management is ready to clear euro payments for two branches in Frankfurt, if necessary (Fernández, Paz-Saavedra and Coto-Millán, 2020). 

If these euro clearance mechanisms are not in operation in time for a rough Brexit and adversely affected the customers of entire RBS group. The procedure has not yet been abandoned, and we have developed a set of contingency plans should it proceed as anticipated. However, more risk management and practical reserve plans shall be needed to reduce the political impact over RBS PLC operations, which affect the interest rate, money market, and other banking-related transactions.

Economic Factors

As the risks of a messy exit from the European Union increase, RBS cautioned that some of its customers and companies would struggle in the first half of the year. The state-controlled bank said a bleak forecast made meeting its goal of a 12 per cent or higher return on tangible equity – an indicator of profitability seems quite difficult. RBS, which has come a long way after receiving a 45 billion pound loan during the financial crisis a decade ago, said it will be difficult to get its cost-to-income ratio below 50% by 2020, though it was still its medium-term target. The bank’s stock has dropped more than 5%, compared to a 2.8 per cent decline in the European bank’s index.

The bank’s management said that the bank was facing yet another era of economic and political instability (Mărginean, Orăștean and Sava, 2020). The depressed interest rate outlook impacts all banks, global economic growth conditions are less promising, and trade relations between China and the United States remain strained. Moreover, this is also influencing investor confidence. The selling of interest in Saudi bank Alawwal helped RBS achieve a 48 per cent rise in first-half pretax earnings to 2.7 billion pounds, resulting in a 1.7 billion pound ($2.06 billion) windfall for investors.

Conclusion

Finally, by looking at RBS’s climate, one can see the level of concern and worry caused by the banking crisis. The organization is in a stressful situation due to layoffs, record highs, and capital flight. RBS is exposed to high political and economic costs when the government continues to expend taxpayer dollars while still rising debt levels. RBS has been suspected of being one of the drivers of coal and oil dependency as electricity policy moves away. Moreover, as the banking sector’s legalities become more transparent, operating expenses may rise, reducing Net Income. RBS is in a vulnerable competitive situation as a result of these events. Due to an internal potential for advantageous adaptation, RBS can rebound from the crisis and raise market share. Its revenues by capitalizing on the preceding strengths and maximizing the opportunities mentioned earlier.

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