RBS 2006 Annual Report Download - page 204
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Please find page 204 of the 2006 RBS annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.RBS Group • Annual Report and Accounts 2006 203
Financial statements
42 Segmental analysis
(a) Divisions
The directors manage the Group primarily by class of business
and present the segmental analysis on that basis. The Group’s
activities are organised as follows:
•Global Banking & Markets is a leading banking partner to
major corporations and financial institutions around the world,
providing a full range of debt financing, risk management and
investment services to its customers.
•UK Corporate Banking provides banking, finance and risk
management services to UK corporate customers. Through its
network of relationship managers across the country it
distributes the full range of Corporate Markets’ products and
services to companies.
•Retail comprises both the Royal Bank and NatWest retail
brands, and a number of direct providers offering a full range
of banking products and related financial services to the
personal, premium and small business markets across several
distribution channels. Retail also includes the Group’s non-
branch based retail business, such as Tesco Personal Finance,
that issues a comprehensive range of credit and charge cards
to personal and corporate customers and provides card
processing services for retail businesses.
•Wealth Management provides private banking and investment
services to its global clients through Coutts Group, Adam &
Company, The Royal Bank of Scotland International and
NatWest Offshore.
•Ulster Bank Group brings together the Ulster Bank and First
Active businesses. Retail Markets serves personal customers
through both brands and Corporate Markets caters for the
banking needs of business and corporate customers.
•Citizens is engaged in retail and corporate banking activities
through its branch network in 13 states in the United States
and through non-branch offices in other states. Citizens includes
the seven Citizens Banks, Charter One, RBS National Bank, US
credit card business, RBS Lynk, merchant acquiring business,
and Kroger Personal Finance, the credit card joint venture with
the second largest US supermarket group.
•RBS Insurance sells and underwrites retail, SME and wholesale
insurance over the telephone and internet, as well as through
brokers and partnerships. The Retail Divisions of Direct Line,
Churchill and Privilege sell general insurance products direct
to the customer. Through its International Division, RBS
Insurance sells general insurance, mainly motor, in Spain,
Germany and Italy. The Intermediary and Broker Division sells
general insurance products through its network of 2,500
independent brokers.
•Manufacturing supports the customer-facing businesses and
provides operational technology, customer support in telephony,
account management, lending and money transmission, global
purchasing, property and other services.
Segments charge market prices for services rendered to other
parts of the Group with the exception of Manufacturing and
central items. The expenditure incurred by Manufacturing
relates to costs principally in respect of the Group’s banking
and insurance operations in the UK and Ireland. These costs
reflect activities that are shared between the various customer-
facing divisions. These shared costs and related assets and
liabilities are not allocated to divisions in the day-to-day
management of the businesses but for the first time in 2006,
with comparatives restated accordingly, they are allocated to
customer-facing divisions for financial reporting purposes on a
basis the directors consider to be reasonable. Funding charges
between segments are determined by Group Treasury, having
regard to commercial demands. The results of each division
before amortisation of purchased intangible assets, integration
costs and net gain on sale of strategic investments and
subsidiaries, and where appropriate, allocation of Manufacturing
costs (‘Contribution’) and after allocation of Manufacturing costs
(‘Operating profit before tax’) are shown below.
Group
Operating
expenses
Net and Depreciation Allocation of Operating
interest Non-interest insurance and Impairment Manufacturing profit
income income Total claims amortisation losses Contribution costs before tax
2006 £m £m £m £m £m £m £m £m £m
Global Banking & Markets 1,110 5,716 6,826 (2,336) (472) (85) 3,933 (143) 3,790
UK Corporate Banking 2,111 1,342 3,453 (737) (338) (189) 2,189 (427) 1,762
Retail 4,211 3,492 7,703 (2,461) (32) (1,343) 3,867 (1,568) 2,299
Wealth Management 500 434 934 (425) (11) (1) 497 (143) 354
Ulster Bank 773 215 988 (294) (21) (71) 602 (214) 388
Citizens 2,085 1,232 3,317 (1,398) (156) (181) 1,582 — 1,582
RBS Insurance 511 5,168 5,679 (4,671) (44) — 964 (214) 750
Manufacturing (151) 45 (106) (2,228) (518) — (2,852) 2,852 —
Central items (554) (238) (792) (592) 24 (8) (1,368) (143) (1,511)
10,596 17,406 28,002 (15,142) (1,568) (1,878) 9,414 — 9,414
Amortisation of intangibles ————(94) — (94) — (94)
Integration costs — — — (118) (16) — (134) — (134)
10,596 17,406 28,002 (15,260) (1,678) (1,878) 9,186 — 9,186
Note:
(1) Revenue represents total income included in the income statement grossed-up for interest payable and fees and commissions payable.