Royal Bank of Scotland Essay Example | Topics and Well Written Essays - 3000 words

Royal Bank of Scotland - Essay Example Majority of the bank’s success in the last decade has been accomplished by a combination of internal innovation, organic growth, and significant acquisitions (Aoki, 2000). The performance of the bank in 2005 demonstrated the capability of the company’s growth, with the growth of customers in all its divisions. The average customer loans and average customer deposits were up to 23 percent and 17 percent respectively during this period. However, the bank has had its pitfalls and failures leading to resignation of the CEO, Fred Godwin with hefty pension (Barba, 2005). This brings up the questions, what are the reasons behind the failures of Royal Bank of Scotland? To what extent were the corporate governance practices responsible for these failures? And how could Royal Bank of Scotland avoid these failures? In order to answer these questions, this paper will discuss the case of the Royal Bank of Scotland’s corporate governance. ... Royal Bank of Scotland functions as an international financial and banking service group offering a broad range of services and products to commercial, personal, and big institutional and corporate customers through its two major subsidiaries. Royal Bank of Scotland was behind the launch of the first successful UK offset account of mortgage with Virgin. This model has currently been translated to the US and Germany successfully. The primary aspect of the Royal Bank of Scotland strategy is to establish the strategic options and the constituent flexibility and diversity mean that growth is independent of one specific market development or economic scenario. This kind of approach and its associated benefits are reflected in the results of Royal Bank of Scotland (Citrin, and Smith, 2003). In 2005, the Royal Bank of Scotland’s total income rose by about 14% contributed to mainly by its organic growth. This accounted for 70% of the increase. The company’s income ratio and cri tical cost was up held at 41%. Continued growth in profits, income and earnings are seemingly certain due to the innovation teams who operate in both the insurance and retail banking areas of the business. The developments of the 2005’s internal innovation included the Royal Bank of Scotland being the very first main international bank to publicly declare that it went live with the FX spot streaming trading through the Bloomberg Professional Service (Clarke, 2004). This kind of development of model electronic commerce complemented the existing electronic trading capabilities of the Royal Bank of Scotland on Bloomberg enabling the clients to trade Fixed Income and Foreign Exchange online from a single platform. Nevertheless,