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Royal Bank of Scotland (SWOT Analysis)

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“SWOT is an acronym for the internal Strengths and Weaknesses of a firm and the environmental Opportunities and Threats facing that firm. SWOT analysis is a widely used technique through which managers create a quick overview of a company’s strategic situation. The technique is based on the assumption that an effective strategy derives from a sound “fit” between a firm’s internal resources (strengths and weaknesses) and its external situation (opportunities and threats). A good fit maximizes a firm’s strengths and opportunities and minimizes its weaknesses and threats. Accurately applied, this simple assumption has powerful implications for the design of a successful strategy.”

Royal Bank of Scotland

The Royal Bank of Scotland Group plc (RBS or the group) is the holding company of one of the world's largest banking and financial services groups. The group operates in the UK, US and internationally through its two principal subsidiaries, the Royal Bank and NatWest. In the US, the group operates through its subsidiary Citizens. It is headquartered in Edinburgh, UK and employs about 199,500 people.

Strengths, Weaknesses, Opportunities and Threats (SWOT)

Location of Factor

TYPE OF FACTOR

Favorable

Unfavorable

Internal

Strengths

  • UK Government’s support ensures adequate ratings
  • Though in trouble, RBS owns a number of global franchises that make it a globally leading financial group
  • Ownership of leading franchises in domestic market

Weaknesses

  • Large loan losses impacting profitability and capitalization
  • Loan book excess growth over deposits impacting liquidity
  • Declining operational efficiency impacting margins

External

Opportunities

  • Commodity trading expected to be profitable in the long run
  • Restructuring likely to reposition RBS as a strong financial services provider
  • Partnership with Bank of China likely to help the group participate in Asian economic growth

Threats

  • Loan defaults likely to rise in future due to low quality loan book
  • ABN AMRO restructuring may not realize the anticipated benefits for the Group
  • SEC Investigation causing reputational damage
  • Increasing online frauds in the UK likely to create operational snags
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