RBS 2008 Annual Report Download - page 107

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Business review continued
RBS Group Annual Report and Accounts 2008
Conduits – the Group’s most significant multi-seller conduits have thus
far continued to fund the vast majority of their assets solely through
ABCP issuance. There were significant disruptions to the liquidity of the
financial markets during the year following the bankruptcy filing of
Lehman Brothers in September 2008 and this required a small amount
of the assets held in certain conduits to be funded by the Group rather
than through ABCP issuance. By the end of 2008 there had been an
improvement in market conditions, supported by central bank initiatives,
which enabled normal ABCP funding to replace this Group funding of
the conduits.
The average maturity of ABCP issued by the Group’s conduits as at 31
December 2008 was 72.1 days (2007– 60.9 days).
The total assets held by the Group’s sponsored conduits are £49.9
billion (2007– £48.1 billion). Since these liquidity facilities are sanctioned
on the basis of total conduit purchase commitments, the liquidity facility
commitments will exceed the level of assets held, with the difference
representing undrawn commitments.
The Group values the funding flexibility and liquidity provided by the
ABCP market to fund client and Group-originated assets. Whilst there
are plans to decrease the multi-seller conduit business in line with the
Group’s balance sheet, the Group is reviewing the potential for new
own-asset conduit structures to add funding diversity.
Outlook for 2009 (unaudited)
The market outlook for 2009 remains uncertain with the prospect of
recession on a global scale. The wholesale funding markets remain
difficult with a high degree of risk aversion towards the banking market
and no restoration of the unguaranteed debt capital markets for bank
issuance yet visible. The continuation of these conditions means that the
use of central bank and other government facilities are likely to be
required for some time. Other deposit initiatives have commenced to
widen wholesale and other retail deposit gathering actions.
Group balance sheet (audited)
The following tables show the contractual undiscounted cash flows receivable and payable up to a period of twenty years including future receipts
and payments of interest.
On balance sheet assets by contractual maturity
Group
0-3 months 3-12 months 1-3 years 3-5 years 5-10 years 10-20 years
2008 £m £m £m £m £m £m
Cash and balances at central banks 12,333 25 —— 229
Loans and advances to banks 61,630 19,369 2,673 921 111 70
Loans and advances to customers 195,553 81,054 138,378 125,621 160,271 152,084
Debt securities 26,006 12,895 24,629 23,927 57,846 24,535
Derivatives held for hedging 266 1,796 2,281 1,359 1,517 649
Settlement balances 17,830 ——— 2—
Other financial assets 621 193 58 111 343 —
314,239 115,332 168,019 151,939 220,092 177,367
On balance sheet liabilities by contractual maturity
Group
0-3 months 3-12 months 1-3 years 3-5 years 5-10 years 10-20 years
2008 £m £m £m £m £m £m
Deposits by banks 154,614 14,347 3,345 2,754 2,048 34
Customer accounts 523,268 33,450 6,577 6,337 7,298 5,319
Debt securities in issue 131,714 48,652 40,067 38,223 38,667 5,626
Derivatives held for hedging 394 2,216 2,543 1,334 2,682 1,373
Subordinated liabilities 1,753 4,271 6,824 5,793 24,503 13,030
Settlement balances and other liabilities 13,351 5 12 6 10 6
825,094 102,941 59,368 54,447 75,208 25,388