28
Corporate &
Institutional Banking
Rory Cullinan
Executive Chairman,
Corporate & Institutional Banking
and Capital Resolution
22%
Share of
operating profit
Contribution
to income
Commitment to customers
was demonstrated by the
award of The Banker’s Most
Innovative Bank in Risk
Management in Q3 2014.
Winner of IFR magazine’s
Sterling Bond House of the
year award in Q4 2014.
For further
information
see pages
143 - 145
Corporate & Institutional Banking (CIB) serves our corporate and
institutional clients primarily in the UK and Western Europe, as well
as those US and Asian multinationals with substantial trade and
investment links in the region, with debt financing, risk management
and trade services, focusing on core product capabilities that are
of most relevance to our clients. This business’s strategy has been
revised in 2015 (see page 14 for Reshaping our CIB business).
Performance overview
• CIB recorded an operating loss of £892
million compared with a loss of £2,882
million in 2013.
• Total income declined by 21%, reflecting
reduced deployment of resources and
difficult trading conditions, characterised by
subdued levels of client activity and limited
market volatility.
• Operating expenses fell by £2,360 million
driven primarily by lower litigation and
conduct costs. Adjusted expenses (1)
decreased by £1,006 million, or 22%,
reflecting the continued focus on cost
savings across both business and
support areas.
• Net impairment releases totalled £9 million
compared with a net impairment charge of
£680 million in 2013, reflecting a reduction
in latent loss provisions and a low level of
new impairments.
• Funded assets fell by 10% reflecting the
focus on core product areas including the
wind-down of Credit Trading and the US
ABP businesses.
• RWAs were managed down by £40.0 billion
from £147.1 billion on 1 January 2014 to
£107.1 billion on 31 December 2014.
Building a better bank
that serves customers well
CIB focused on its strengths in core product
areas during 2014, reducing the scale of the
business and simplifying the operating model.
This allowed CIB to better serve customers
while deploying fewer resources.
The commitment to customers was
demonstrated by the award of The Banker’s
Most Innovative Bank in Risk Management
in Q3 2014 and by winning IFR magazine’s
Sterling Bond House of the year award in
Q4 2014.
The drive to concentrate on core products is
evidenced by the 27% fall in RWAs (compared
with 1 January 2014 on an end-point CRR
basis) and the 22% year on year fall in adjusted
expenses.
Note:
(1)Excluding restructuring and litigation and conduct costs.
Performance highlights
2014
2013
Return on equity (%)
(4.2)
(12.9)
Cost:income ratio (%)
123
144
Net loans and advances to customers
excluding reverse repos (£bn)
72.8
68.2
Customer deposits excluding repos (£bn)
59.4
64.8
Risk-weighted assets (£bn)
107.1
120.4
Note: RWAs at 31 December 2013 are on Basel 2.5 basis and on the end-point CRR basis at 31 December 2014.
Business review
29
Customer Case Study
Manchester takes off
Manchester Airports Group (MAG) owns and operates
four UK airports including Manchester, the UK’s third
largest airport, and London Stansted, the fastest
growing airport in London. They serve over 45 million
passengers and handle more than 600,000 tonnes of
freight every year, contributing over £4 billion to the
UK economy and directly supporting around 45,000
full-time jobs.
Our long-standing relationship with MAG has seen us
support both their £1.5 billion acquisition of London
Stansted in 2013, and two bond issuances which
raised a total of £810 million. Those funds allowed
MAG to refinance the acquisition debt used to buy
London Stansted, and gave them a platform to invest in
services and facilities at their airports.
A good example of their investment is the multi-million
pound upgrade of the terminal at London Stansted.
The expansion will double the size of the security
space, expand the departure lounge and help create a
new lounge area in the terminal building.