RBS 2007 Annual Report Download - page 190

Financial statements
RBS Group • Annual Report and Accounts 2007
188
Notes on the accounts continued
31 Risk management (continued)
The following table shows an analysis of the loan impairment charge.
2007 2006 2005
Loan impairment charge £m £m £m
Latent loss provisions charge 88 87 14
Collectively assessed provisions charge 1,744 1,573 1,399
Individually assessed provisions charge 274 217 290
Total charge to income statement 2,106 1,877 1,703
Charge as a % of customer loans and advances – gross (1) 0.30% 0.46% 0.46%
Note:
(1) Gross of provisions and excluding reverse repurchase agreements.
Liquidity risk
The Group’s liquidity policy is designed to ensure that it can at
all times meet its obligations as they fall due.
Liquidity management within the Group focuses on overall
balance sheet structure and the control, within prudent limits,
of risk arising from exposure to the mismatch of maturities
across the balance sheet and from undrawn commitments and
other contingent obligations. The management of liquidity risk
within the Group is undertaken within limits and other policy
parameters set by Group Asset and Liability Management
Committee (GALCO). Compliance is monitored and
coordinated by Group Treasury both in respect of internal
policy and the regulatory requirements of the Financial
Services Authority. In addition, all subsidiaries and branches
outside the UK ensure compliance with any local regulatory
liquidity requirements and are subject to Group Treasury
oversight.
Diversification of funding sources
The structure of the Group’s balance sheet is managed to
maintain substantial diversification, to minimise concentration
across its various deposit sources, and to limit the reliance on
total short-term wholesale sources of funds (gross and net of
repos) within prudent levels.
During 2007, the Group’s funding sources remained well
diversified by counterparty, instrument and maturity, both
before and after the acquisition of ABN AMRO in October 2007.
2007 2006
Sources of funding £m % £m %
Customer accounts (excluding repos)
Repayable on demand 346,074 24 197,771 28
Time deposits 201,375 14 122,467 17
Total customer accounts (excluding repos) 547,449 38 320,238 45
Debt securities in issue over one year
remaining maturity 117,873 8 44,006 6
Subordinated liabilities 37,979 3 27,654 4
Owners’ equity 53,038 4 40,227 6
Total customer accounts and long term funds 756,339 53 432,125 61
Repo agreements with customers 134,916 10 63,984 9
Repo agreements with banks 163,038 11 76,376 11
Total customer accounts, long term funds
and collateralised borrowing 1,054,293 74 572,485 81
Debt securities in issue up to one year
remaining maturity 155,742 11 41,957 5
Deposits by banks (excluding repos) 149,595 10 55,767 8
Short positions 73,501 5 43,809 6
Total 1,433,131 100 714,018 100