RBS (NYSE: RBS) was one of the largest banks in the world before the financial crisis of 2008. Its £2-trillion balance sheet was bigger than most banks at the time. However, the bank has changed considerably since the recession. It has shrunk considerably in size – moving away from a business model that predominantly focused on investment bank operations to one that depends almost completely on traditional loans-and-deposits banking. Notably, a bulk of the reorganization started in 2012 when the bank slashed its investment banking activities. The large-scale reorganization plan was triggered by conditions imposed on RBS as a part of its bail-out at the peak of the recession as well as stricter regulatory changes in the wake of the downturn.
But what if no such conditions had been imposed on RBS, and it had chosen to retain a full-fledged investment banking division? Trefis answers this question and highlights how RBS’s revenues and profits would have trended if it had continued to focus on its investment banking operations in an interactive. We focus on trends after 2012, as that is when the bank reorganized its investment banking operations.
We Use Trends In Investment Banking Margin and Revenue Growth For RBS’s Peers To Extrapolate RBS’s Numbers