The probe, announced in parent company Royal Bank of Scotland’s annual statement, released 26 January, is exploring accusations that Coutts’ Zurich office aided and abetted evasion taxes by its customers.
Both current and former employees are involved in the investigation, which the bank said it is cooperating with.
“Evidence of wrongdoing”
RBS chief executive Ross McEwan discussed the enquiry following the release of the firm’s results, pledging to take strong action if any of the allegations are found to be true.
He said: “I want to be very clear if we find anything that has evidence of wrongdoing we will come incredibly hard on any of those issues.
“Any situation like this we take seriously […], it is the reputation of our business. This is what has tarnished the banking industry and in my view private banks have taken far too long to catch up with the public’s expectations.”
The investigation comes alongside an enquiry into allegations that clients of the Zurich branch did not declare their assets in compliance with US tax laws.
Coutts has subsequently informed the Department of Justice that it will cooperate with the probe, which requires the firm to provide a report detailing all US-related accounts.
Allegations aside, RBS’s well-documented restructuring process has already seen various sell-offs and downsizing of businesses.
“No immediate danger”
However, James Box, banking analyst at Brewin Dolphin, believes that Coutts is in no immediate danger.
“Coutts seems to be fine,” he said. “It is a core part of RBS’s business and a great brand name, though it is just small part of what RBS represents as an investment. The bigger moving parts are building capital, shrinking the investment bank and non-core assets, and reducing costs and ring-fencings.”
RBS announced losses of £3.5bn for 2014 in its annual results, the seventh consecutive year that the bank has posted in the red.
One of the main contributing factors was the sale of the firm’s US business, Citizens, which equated to a £4bn write-down.
Box believes that despite appearances the figure represents an improvement on the previous year – when RBS made a loss of £9bn – and also progress being made in the business’s long-term plan.
“RBS have made great progress and the management team are refreshingly upfront about how terrible things are and how they are working to improve things from a low base,” he explained.
