RBS' 54 Branch Shutdown Drive to be the Last Until 2020
The Royal Bank of Scotland RBS has announced that it will undertake a final branch closure move in January 2019, following which it plans to keep the count stable until at least 2020. On reviewing its branch network in England and Wales, the decision to shut down about 54 branches was taken, impacting nearly 258 jobs.
The move forms part of the Royal Bank of Scotland’s failure to divest its England & Wales and NatWest retail banking business in Scotland as a separate ‘challenger bank’ under the brand name, Williams & Glyn. Since the idea to divest has been dropped, the challenger bank is being reintegrated back into the core bank.
Another reason put forth by the bank is that the branches in England & Wales were located close to another Royal Bank of Scotland or NatWest branch. Further, the state-backed bank disclosed that since 2014, it has witnessed a 30% decline in branch transactions across the region, whereas the use of digital modes such as mobile banking rose 53% and mobile transactions have increased 74%.
The bank promised to enhance its customers experience by developing digital services. It informed customers that they could fulfil basic banking needs from NatWest branches.
Further, noting that some people still refrain from the use of digital modes due to lack of knowledge, Royal Bank of Scotland introduced a separate taskforce — TechXperts — who would be helping customers by providing training and support in the related matter.
Moreover, a spokesperson at the bank said, “We will now focus on investing in our Royal Bank network in England and Wales to make sure customers have a consistent range of products and services wherever they bank, be it Scotland, England or Wales.”
We expect that RBS’ efforts to improve digital banking methods will support overall growth in the near term. Moreover, resumption of dividend payment reflects its improving financial position and is expected to act as a tailwind. Though heightened competition, volatility in the global economy and litigation costs remain key concerns, the bank’s ongoing restructuring measures will likely help offset some of these challenges.
Shares of Royal Bank of Scotland have lost 14.1% so far this year compared with 14.6% decline witnessed by the industry.
The stock currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the same space are Hang Seng Bank Ltd. HSNGY, DNB ASA DNHBY and The Bank of N.T. Butterfield & Son Limited NTB. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Hang Seng has remained stable for the current year in the last 30 days. The company’s share price has increased 10% in the past six months.
DNB ASA has witnessed 16% upward earnings estimate revision for 2018 in the last 60 days. Its share price has risen 2.3% in the past six months.
Bank of N.T. Butterfield & Son’s shares have gained 11.1% in past six months and its earnings estimates for 2018 have moved up slightly in the past 60 days.
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