RBS retrenchment opens up new opportunities

By:
Kimberley Long
Published on:

Rival bankers reveal their client-acquisition plans as RBS pulls out of international transaction banking, forcing corporates to embark on the complex task of choosing new banking partners.

RBS’s announcement it is retrenching from international transaction services in 25 markets has triggered an avalanche of client enquiries at rival banks.

Mark Buitenhek 2-160x186
  Some of the clients want to move as soon as possible as they are angry with what has happened

Mark Buitenhek,
ING

Although there were market mutterings that RBS was scaling back its international business, the extent of the pullout has caught many off-guard. 

RBS announced in February it was closing its international global transaction services operations for customers outside the UK and Ireland, though it plans to continue servicing large corporates with substantial domestic exposures. In early July, RBS announced it was referring its existing international clients to BNP Paribas, which the bank had won following a tender process. 

At its peak, Euromoney understands RBS has had 7,000 clients. Its TS income dropped 7% in 2014 to £818 million.

Matt Tuck, head of global corporate banking at Barclays, says: "We had expected to see a change in strategy, but we were surprised by the speed the decision to withdraw was made and implemented."

The scale of the retrenchment has also apparently come as a hit to RBS’s many corporate clients. 

"From what we have seen, it came to the customers as a hell of a surprise," says Mark Buitenhek, global head transaction services at ING. "As of the moment they told clients they were going to withdraw, we saw a massive inflow of requests and RFPs from clients."

There are thousands of companies looking to move, covering a wide spectrum of business size and geographic footprint.

"We have been contacted by six times the amount of clients we would expect to hear from annually over the last few months," says Buitenhek. He expects even more in the coming months.

The largest corporates have already started to investigate alternative banking partners. 

"The clients we have seen already are the largest ones as they will need the most time to migrate," says Buitenhek. "Some of the clients want to move as soon as possible as they are angry with what has happened."

Barclays' Tuck notes that the speed some are looking for new providers demonstrates how corporates consider their operational banking to be core to their business.

While bankers lick their lips at the prospect of new business, for some corporates there is a huge task ahead.

Some of the names are new, which is very exciting for the business, but a significant number are also well known to us
Matt Tuck, Barclays

Buitenhek says: "It can take a large corporate up to three years to fully transfer to a new bank in a planned move they have prepared for, but this is unexpected."

It is unlikely there will be a migration fee levied by the new banking provider. 

"It would not cost the corporates anything to move across in terms of fees [such as new account activation fees], but it is a big investment of their time," says Tuck. "We’re very focused on making the transition as simple as possible."

But many companies lack the capacity to complete this transition quickly.

"It must be a very difficult position for the clients right now," says Buitenhek. "They need resources for completing the migration. For any companies that may already be in dire straits, it could be a very hard time for them. The treasurers are taking on a huge task. We are seeing enormous pressure not just for the banks but for the consultants."

Concerns

Corporates eager to move are expressing a number of concerns, citing the complexity of the transition.

Banks that simplify the process will be at a competitive advantage. 

Tuck says Barclays has established a "dedicated project in play for some time to streamline and simplify the on-boarding process meaning moving to Barclays has never been simpler, especially for those that are already a customer". He says the bank has already had a number of successes in acquiring former RBS clients.

ING has responded by setting up a dedicated landing page on its website for on-boarding the corporates looking for a new bank. It even alludes to how an "unexpected change" can lead to something more positive. In particular, the bank is looking at the market closest to home.