RBS 2007 Annual Report Download - page 32

RBS Group • Annual Report and Accounts 2007
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Business review
Business 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 £44.4 billion at the end of 2007.
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 ninth 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 £1,900.5 billion and owners’ equity
of £53.0 billion at 31 December 2007. It is strongly capitalised
with a total capital ratio of 11.2% and tier 1 capital ratio of 7.3%
as at 31 December 2007.
Organisational structure and business overview
The Group’s activities are organised in the following business
divisions: Corporate Markets (comprising Global Banking &
Markets and UK Corporate Banking), Retail Markets (comprising
Retail 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.
Global Banking & Markets (‘GBM’) 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. GBM has a wide range
of clients across its chosen markets. It has relationships with an
overwhelming majority of the largest UK, European and US
corporations and institutions. GBM’s principal activity in the US is
conducted through RBS Greenwich Capital.
UK Corporate Banking is the largest provider of 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 Markets leads the co-ordination and delivery of our multi-
brand retail strategy across our product range and comprises
Retail (including our direct channels businesses) and Wealth
Management.
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.
In core retail banking, Retail offers a comprehensive product
range across the personal and small business market: money
transmission, savings, loans, mortgages 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, including the largest network of
branches and ATMs in the UK, the internet and the telephone.
Retail also includes the Group’s non-branch based retail
businesses that issue a comprehensive range of credit and
charge cards to personal and corporate customers and provides
card processing services for retail businesses. Retail is the
leading merchant acquirer in Europe and ranks third globally.
It also includes Tesco Personal Finance, The One account, MINT,
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 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 offices in 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 Group including First Active, provides a
comprehensive range of retail and wholesale financial services in
the Republic of Ireland and Northern Ireland, supported by an
extensive network of branch and business centres. Retail Markets
operates in the personal and affluent banking sectors. Corporate
Markets provides a wide range of services in the commercial,
corporate and wealth markets. RBS’s European Consumer
Finance (‘ECF’) activities, previously part of RBS Retail Markets,
are now managed within Ulster Bank. ECF provides consumer
finance products, particularly card-based revolving credits and
fixed-term loans, in Germany and the Benelux countries.
Citizens is the second largest commercial banking organisation in
New England and the ninth 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, trust services and retail
investment services. Citizens includes RBS Lynk, our merchant
acquiring business, and Kroger Personal Finance, our credit card
joint venture with the second largest US supermarket group.
RBS Insurance is the second largest general insurer in the UK, by
gross written premiums. It sells and underwrites retail and SME
insurance over the telephone and internet, as well as through