Royal Bank Of Scotland Postpones Closing Of 10 Branches
Zacks Investment Research | May 09, 2018 09:34PM ET
Royal Bank of Scotland (LON:RBS)’s (NYSE:RBS) recent decision to close a number of branches with a view to control expenses attracted widespread criticism. Following this, the bank has agreed to delay closure of 10 of the 62 Scottish branches.
However, the decision is only temporary and will be reviewed again in 2018 to find whetherthe branches have been able to attain a “sustained and viable increase” in both transaction volumes and income.
The bank promises to be fair to the review findings and act accordingly. If the review finds that a smaller number of branches should stay open, then the recommendation will be accepted.
Apart from this, the Royal Bank of Scotland will not be conducting further reviews on its Scottish branch networks until 2020.
The CEO backed its move to close so many branches with the changing customer preferences to digital modes of banking. Further, the closing of branches would also help the state-backed bank to cut costs and compete with othergrowing digital lenders.
The bank has reached the most impending settlement with the U.S. Justice Department over residential mortgage-backed securities probe dating back to 2005. It is required to pay $4.9 billion in penalty to the regulator. Also, this settlement has cleared the way for the U.K. government to sell its nearly 71% stake in the bank.
Royal Bank of Scotland’s diversified business model and commitment to improve financials are likely to support its overall growth in the near term. Though the legal settlementwill enable the bank to distribute dividends among shareholders, it is likely to create a dent in its financials.
Shares of Royal Bank of Scotland have gained 12.8% over the past year, outperforming 5.4% growth recorded by the Zacks Investment Research
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