RBS 2004 Annual Report Download - page 61

section
01
Operating and
financial review
59
Annual Report and Accounts 2004
Operating and financial review
underwrites personal insurance in Spain, Italy and Germany.
UKI Partnerships is a leading provider of insurance and
motoring related services through partner brands, including
through Tesco Personal Finance. NIG sells personal and
commercial products through a network of intermediaries,
while Inter Group acts as an insurance administrator and Devitt
Insurance Services operates as a specialist broker administrator.
Ulster Bank provides a comprehensive range of retail and
corporate banking services in Northern Ireland and the
Republic of Ireland. In retail banking, Ulster Bank operates a
network of branches throughout Ireland serving personal and
commercial customers. Corporate Banking and Financial
Markets provides a wide range of services in the corporate
and institutional markets.
In January 2004 Ulster Bank acquired First Active plc, a
leading provider of mortgages, retail savings and investment
products in the Republic of Ireland. First Active and Ulster
Bank have retained their own distinctive brands, branch
networks and customer propositions, with efficiencies derived
from shared central manufacturing activities.
Citizens is the second largest commercial banking organisation
in New England and the eighth largest commercial banking
organisation in the US measured by deposits. Citizens provides
retail and corporate banking services under the Citizens brand
in the states of Connecticut, Delaware, Massachusetts, New
Hampshire, New Jersey, Pennsylvania and Rhode Island, and
the Charter One brand in the states of Illinois, Indiana,
Michigan, New York, Ohio and Vermont. Through its branch
network Citizens provides a full range of retail and corporate
banking services, including personal banking, residential
mortgages and cash management. In addition, Citizens
engages in a wide variety of commercial lending, consumer
lending, commercial and consumer deposit products,
merchant credit card services, insurance products, trust
services and retail investment services.
During 2004, Citizens completed the acquisitions of Thistle
Group Holdings, Co., the holding company of Roxborough
Manayunk Bank and Charter One Financial Group, Inc., the
holding company of Charter One Bank.
Competition
The Group faces intense competition in all the markets it
serves. In the UK, the Group’s principal competitors are the
other UK retail and commercial banks, building societies
(which are similar to savings and loans associations in the US)
and the other major international banks represented in London.
Competition for corporate and institutional customers in the UK
is from UK banks and from large foreign financial institutions
who are also active and offer combined investment and
commercial banking capabilities. In asset finance, the Group
competes with banks and specialised asset finance providers,
both captive and non-captive.
In the small business banking market, the Group competes
with other UK clearing banks, with specialist finance providers
and building societies.
In the personal banking segment the Group competes with UK
banks and building societies, major retailers, life assurance
companies and internet-only players. In the mortgage market
where the Group competes with UK banks and building
societies, re-mortgaging activity by customers has been at a
high level. NatWest Life and Royal Scottish Assurance compete
with Independent Financial Advisors and life assurance
companies. The competitive situation in the long term savings
market is dynamic due to the uncertainties created by
regulatory change and continued evolution of institutions,
particularly in the mutual sector.
In the UK credit card market large retailers and specialist card
issuers, including major US operators, are active in addition to
the UK banks and building societies. Competitive pressure
includes aggressive pricing, loyalty and reward schemes, and
packaged benefits. In addition to physical distribution channels,
providers compete through direct marketing activity and,
increasingly, the internet.
In Wealth Management, The Royal Bank of Scotland International
and NatWest Offshore compete with other UK and international
banks to offer offshore banking services. Coutts and Adam &
Company compete as private banks with UK clearing and
private banks, and with international private banks.
RBS Insurance competes in personal lines insurance and to a
limited extent in commercial insurance. There is competition
from a range of insurance companies which now operate
telephone and internet direct sales businesses. RBS Insurance
also competes with local insurance companies in the direct
motor insurance markets in Spain, Italy and Germany.
In Ireland, Ulster Bank and First Active compete in retail and
commercial banking with the major Irish banks and building
societies, and with other UK and international banks and
building societies active in the market. Competition is
intensifying as both UK, Irish and other European institutions
seek to expand their businesses.
In the United States, Citizens competes in the New England,
Mid-Atlantic and Mid-West retail and mid-corporate banking
markets with local and regional banks and other financial
institutions. The Group also competes in the US in large
corporate lending and specialised finance markets, and in
fixed-income trading and sales. Competition is principally with
the large US commercial and investment banks and
international banks active in the US.
In other international markets, principally in continental Europe,
the Group faces competition from the leading domestic and
international institutions active in the relevant national markets.