RBS 2007 Annual Report Download - page 208

Financial statements
RBS Group • Annual Report and Accounts 2007
206
Notes on the accounts continued
(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 an extensive range of debt financing, risk
management and investment services to its customers.
•RFS Holdings excluding minority interest comprises those
activities of ABN AMRO that are attributable to the Group
including investment banking, international cash payments
and trade finance.
•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 two banks, RBS Citizens, NA and Citizens Bank
of Pennsylvania. Citizens also includes RBS Lynk, our
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 and SME
insurance over the telephone and internet, as well as through
brokers and partnerships. 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 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.
•RFS Holdings minority interest comprises those activities of
ABN AMRO that are attributable to the other consortium
banks including retail banking in the Netherlands and Brazil.
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 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.
39 Segmental analysis