RBS 2005 Annual Report Download - page 57

section
01
Operating and
financial review
55
Operating and financial review
Annual Report and Accounts 2005
Ulster Bank Corporate Banking & Financial Markets caters for
the banking needs of business and corporate customers,
including treasury and money market activities, asset finance,
ebanking and international services.
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 Connecticut, Delaware, Massachusetts, New Hampshire, New
Jersey, New York state, Pennsylvania, Rhode Island and Vermont
and the Charter One brand in Illinois, Indiana, Michigan and
Ohio. 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.
RBS Insurance is the second largest general insurer in the UK,
by gross earned premiums. Through the Direct Line, Churchill
and Privilege brands it sells and underwrites personal
insurance over the telephone and the internet in the UK.
Through the Direct Line brand, RBS Insurance also sells and
underwrites personal insurance in Spain, Italy and Germany.
Through UKI Partnerships, our partnership business, we
operate insurance schemes on behalf of third parties who in
turn sell insurance products to their customers. 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.
Manufacturing supports the customer facing businesses in the
UK and Ireland and manages the Group’s telephony, account
management and money transmission operations. It is also
responsible for information technology operations and
development, global purchasing, property and other services.
Manufacturing drives optimum efficiencies in high volume
processing activities, leverages the Group’s purchasing power
and has become a centre of excellence for managing large
scale and complex change programmes such as integration.
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 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, specialist finance providers and,
for smaller businesses, 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 the
Group competes with UK banks and building societies. 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 the 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. Competitive activity is across a number of
dimensions including introductory and longer term pricing,
loyalty and reward schemes, and packaged benefits. Whilst
competition remains intense, pricing of introductory interest
rate offers has become less aggressive. In addition to physical
distribution channels, providers compete through direct
marketing activity and the internet.
In Wealth Management, The Royal Bank of Scotland International
competes 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 strong
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 UK, Irish and other European institutions seek
to expand their businesses.
In the United States, where competition is intense, 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.