RBS 2008 Annual Report Download - page 222

221RBS Group Annual Report and Accounts 2008
Impairment review
The Group’s goodwill acquired in business combinations is reviewed
annually at 30 September for impairment by comparing the recoverable
amount of each cash generating unit (CGU) to which goodwill has been
allocated with its carrying value. In light of the unprecedented market
conditions the review has been updated to reflect the latest position as
at 31 December 2008.
The Group recognised goodwill of £23.3 billion (33.5 billion) following
the preliminary allocation of fair values since acquiring ABN AMRO on
17 October 2007. On final allocation of fair values, goodwill of £23.9
billion (34.2 billion) was recognised (see Note 34), of which £17.6
billion (25.3 billion) was attributable to minority interests. Of the
minority interests goodwill, £5.4 billion (5.7 billion) was in respect of
Santander acquired businesses which were subsequently sold during
2008. The remaining goodwill in respect of the State of the Netherlands
minority interest of £18.8 billion (19.6 billion) was reduced in part by
£2.7 billion (2.9 billion) following the sale of the Asset Management
business with £14.6 billion (15.2 billion) of the remainder subsequently
impaired following the acquisition by the State of the Netherlands for
£6.2 billion (6.5 billion). In addition, a further £1.1 billion (1.2 billion)
impairment was recognised on other intangible assets attributable to the
State of the Netherlands acquired businesses.
On the finalisation of the allocation of fair values, goodwill arising on the
acquisition of ABN AMRO attributable to the Group has been allocated
to those CGUs which are expected to benefit from the synergies of the
combination based on their relative values. In addition, following the
reorganisation of the Group reporting structure, NatWest and Citizens
goodwill was reallocated to the appropriate CGUs.
The CGUs where the goodwill arising is significant, principally on the
acquisitions of NatWest, Charter One, ABN AMRO and Churchill, are
as follows:
Goodwill
Recoverable prior to Goodwill at
amount write down Write down 31 December
2008 based on: £m £m £m
Global Banking & Markets Value in use 8,946 (8,946) —
Global Transaction Services Value in use 3,121 — 3,121
UK Retail & Commercial Banking Value in use 6,009 — 6,009
US Retail & Commercial Banking Value in use 7,405 (4,382) 3,023
Europe & Middle East Retail & Commercial Banking Value in use 1,201 (1,201) —
Asia Retail & Commercial Banking Value in use 970 (863) 107
RBS Insurance Value in use 935 — 935
Recoverable Goodwill at
amount 30 September
2007 based on: £m
RBS Insurance Fair value less costs to sell 1,064
Global Banking & Markets Fair value less costs to sell 2,346
UK Corporate Banking Fair value less costs to sell 1,630
Retail Fair value less costs to sell 4,278
Wealth Management Fair value less costs to sell 1,100
Citizens – Retail Banking Value in use 2,067
Citizens – Commercial Banking Value in use 2,274
Citizens – Consumer Financial Services Value in use 1,701
The analysis of goodwill by operating segment is shown in Note 38.