RBS 2005 Annual Report Download - page 56

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Operating and financial review
Operating and financial review
Description of business
Introduction
The Royal Bank of Scotland Group plc is the holding company
of one of the world’s largest banking and financial services
groups, with a market capitalisation of £56 billion at the end of
2005. Headquartered in Edinburgh, the Group operates in the
UK, US and internationally through its two principal subsidiaries,
the Royal Bank and NatWest. Both the Royal Bank and NatWest
are major UK clearing banks whose origins go back over 275
years. In the US, the Group’s subsidiary Citizens is ranked the
eighth largest commercial banking organisation by deposits.
The Group has a large and diversified customer base and
provides a wide range of products and services to personal,
commercial and large corporate and institutional customers.
The Group had total assets of £776.8 billion and shareholders’
equity of £35.4 billion at 31 December 2005. It is strongly
capitalised with a total capital ratio of 11.7% and tier 1 capital
ratio of 7.6% as at 31 December 2005.
Organisational structure and business overview
The Group’s activities are organised in the following business
divisions: Corporate Markets (formerly Corporate Banking &
Financial Markets), Retail Markets (comprising Retail Banking,
Retail Direct and Wealth Management), Ulster Bank, Citizens,
RBS Insurance and Manufacturing. A description of each of
the divisions is given below.
Corporate Markets is focused on the provision of debt and risk
management services to medium and large businesses and
financial institutions in the UK and around the world. Corporate
Banking & Financial Markets was renamed Corporate Markets
on 1 January 2006 when its activities were reorganised into
two businesses, UK Corporate Banking and Global Banking &
Markets, in order to enhance our focus on the distinct needs of
these two customer segments. These two divisions broadly
correspond to the analysis of Corporate Markets by customer
grouping presented in this review.
Corporate Markets provides an integrated range of core
banking, structured finance and financial markets products
and services, including acquisition finance, trade finance,
leasing, factoring, treasury services, money markets, foreign
exchange, derivatives, bond origination and trading, sovereign
debt trading, futures brokerage and interest rate risk
management services.
Corporate Markets is the largest provider of banking, finance
and risk management services to Mid-Corporate and
Commercial customers in the UK. Through its network of
relationship managers across the country it provides the full
range of Corporate Markets products and services to small,
medium and large companies.
Corporate Markets is a leading banking partner to major
corporations and financial institutions around the world,
specialising in providing a full range of debt financing, risk
management and investment services to its Global Banking
& Markets customers.
Retail Markets was established in June 2005 to strengthen
co-ordination and delivery of our multi-brand retail strategy.
Retail Markets comprises Retail Banking, Retail Direct and
Wealth Management.
Retail Banking is one of the leading retail banks in the UK. The
division comprises both the Royal Bank and NatWest retail brands.
It offers a full range of banking products and related financial
services to the personal, premium and small business markets.
In the personal banking market, Retail Banking offers a
comprehensive product range: money transmission, savings,
loans, mortgages and insurance. In the small business market,
Retail Banking provides a full range of services which include
money transmission and cash management, short, medium
and long-term financing, deposit products and insurance.
Customer choice and product flexibility are central to the Retail
Banking proposition and customers are able to access services
through a full range of channels: branches, ATMs, the internet
and the telephone.
Retail Direct consists of the Group’s non-branch based retail
businesses. Retail Direct issues a comprehensive range of
credit and charge cards to personal and corporate customers
and provides card processing services for retail businesses.
It also includes Tesco Personal Finance, The One account,
First Active UK, Direct Line Financial Services and Lombard
Direct, all of which offer products to customers through direct
channels principally in the UK. In continental Europe, Retail
Direct offers a similar range of products through the RBS and
Comfort Card brands.
Wealth Management provides private banking and investment
services to its clients through a number of leading UK and
overseas private banking subsidiaries and offshore banking
businesses. Coutts is one of the world’s leading international
wealth managers with over 20 offices worldwide, including
Switzerland, Dubai, Monaco, Hong Kong and Singapore, as well
as its premier position in the UK. Adam & Company is the major
private bank in Scotland. The offshore banking businesses – The
Royal Bank of Scotland International and NatWest Offshore –
deliver retail banking services to local and expatriate customers,
principally in the Channel Islands, the Isle of Man and Gibraltar.
Ulster Bank brings together Ulster Bank and First Active to
provide a highly effective challenger to the larger competitors
in the Irish banking market. Serving personal and small
business customers, Ulster Bank Retail Banking provides
branch banking, wealth management and direct banking
throughout the Republic of Ireland and Northern Ireland. With
a continued focus on providing customer choice and value,
First Active serves personal and small business customers
through its separately branded product offerings and branch
network throughout the Republic of Ireland. Both First Active
and Ulster Bank retain their own brands, branch networks and
distinctive customer propositions and benefits are achieved
by selling more mortgage and savings products to Ulster
Bank’s customers and a broader range of banking products to
First Active’s customers.