RBS 2007 Annual Report Download - page 66

RBS Group • Annual Report and Accounts 2007
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Business review continued
Business review
Central items
2007 2006 2005
£m £m £m
Funding and corporate costs 145 862 950
Departmental and other costs 461 442 402
606 1,304 1,352
Allocation of Manufacturing costs 146 143 140
Total central Items 752 1,447 1,492
2007 compared with 2006
Central costs were substantially lower, reflecting in part the
gains realised on a number of planned disposals that formed
part of the Group’s funding arrangements for the acquisition of
ABN AMRO. These gains contributed to a reduction of £717
million in funding and corporate costs, which also benefited
from a reduction of £152 million in the carrying value of our
own debt accounted for at fair value and the receipt of a
dividend on our investment in Bank of China. These benefits
were partially offset by goodwill payments amounting to £119
million in respect of current account administration fees.
Excluding realised gains totalling £475 million, funding and
corporate costs were £620 million, 28% lower than in 2006.
Departmental and other costs increased by 4% to £461 million.
This largely reflects the centralisation of certain functions and
increased regulatory requirements.
2006 compared with 2005
Total central items decreased by 3% to £1,447 million.
Funding and corporate costs were 9% lower at £862 million,
largely reflecting a year on year reduction of £41 million in
IFRS-related volatility. The Group hedges its economic risks,
and volatility attributable to derivatives in economic hedges
that do not meet the criteria in IFRS for hedge accounting is
transferred to the Group’s central treasury function.
Departmental and other costs were 10% higher at £442 million
largely attributable to additional pension costs and higher
securitisation costs.