RBS 2008 Annual Report Download - page 27

RBS Group Annual Report and Accounts 200826
Business review
Description of business
Introduction
The Royal Bank of Scotland Group plc is the holding company of a
large global banking and financial services group. Headquartered in
Edinburgh, the Group operates in the United Kingdom, the United States
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 United States, the
Group’s subsidiary Citizens is a large commercial banking organisation.
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 in over 50 countries.
Following a placing and open offer in December 2008, HM Treasury
currently own approximately 58% of the enlarged ordinary share capital
of the company and £5 billion of preference shares. The company,
subject to shareholder approval, intends to issue new ordinary shares
by way of an open offer, the proceeds from which will be used to repay
the £5 billion non-cumulative sterling preference shares issued to HM
Treasury, together with the accrued dividend. The open offer will be
underwritten by HM Treasury and this may result in their shareholding
increasing to approximately 70% of the enlarged ordinary share capital
of the company.
The Group had total assets of £2,401.7 billion and owners’ equity of
£58.9 billion at 31 December 2008. The Group’s capital ratios, which
include the equity minority interest of Fortis Bank Nederland and
Santander in ABN AMRO, were a total capital ratio of 14.1 per cent.,
a core Tier 1 capital ratio of 6.8 per cent. and a Tier 1 capital ratio of
10.0 per cent., as at 31 December 2008.
Organisational structure and business overview
The Group’s activities are organised in the following business divisions:
Global Markets (comprising Global Banking & Markets and Global
Transaction Services), Regional Markets (comprising UK Retail &
Commercial Banking, US Retail & Commercial Banking, Europe &
Middle East Retail & Commercial Banking and Asia Retail & Commercial
Banking), RBS Insurance and Group Manufacturing. A description of
each of the divisions is given below.
Global Banking & Markets is a leading banking partner to major
corporations and financial institutions around the world, providing an
extensive range of debt and equity financing, risk management and
investment services to its customers. In 2008 the division was organised
along four principal business lines: rates, currencies, and commodities,
including RBS Sempra Commodities LLP (the commodities-marketing
joint venture between RBS and Sempra Energy which was formed on 1
April 2008); equities; credit markets; and asset and portfolio
management.
Global Transaction Services ranks among the top five global
transaction services providers, offering global payments, cash and
liquidity management, as well as trade finance, United Kingdom and
international merchant acquiring and commercial card products and
services. It includes the Group’s corporate money transmission activities
in the United Kingdom and the United States.
UK Retail & Commercial Banking (RBS UK) comprises retail, corporate
and commercial banking and wealth management services. It operates
through a range of channels including on-line and fixed and mobile
telephony, and through two of the largest networks of branches and
ATMs in the UK.
In the Retail market, RBS UK serves over 15 million personal customers
through the RBS and NatWest brands. It offers a full range of banking
products and related financial services including mortgages,
bancassurance products, deposit accounts, and credit and charge
cards.
RBS UK holds a leading market share across all of the Business &
Commercial and Corporate sectors. Through its network of relationship
managers it distributes a full range of banking, finance and risk
management services, including market-leading Invoice Finance and
Asset Finance offerings.
The UK wealth management arm offers high quality private banking and
investment services through the Coutts, Adam & Company, RBS
International and NatWest Offshore brands.
US Retail & Commercial Banking provides financial services primarily
through the Citizens and Charter One brands.
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 was ranked the tenth-largest
commercial banking organisation in the United States based on
deposits as at 30 September 2008.
Europe & Middle East Retail & Commercial Banking comprises Ulster
Bank and the Group’s combined retail and commercial businesses in
Europe and the Middle East.
Ulster Bank provides a comprehensive range of financial services
across the island of Ireland. Its retail banking arm has a network of
branches and operates in the personal, commercial and wealth
management sectors, while its corporate markets operations provides
services in the corporate and institutional markets.
Asia Retail & Commercial Banking is present in markets including
India, Pakistan, China, Taiwan, Hong Kong, Indonesia, Malaysia and
Singapore. It provides financial services across four segments: affluent
banking, cards and consumer finance, business banking and
international wealth management, which offers private banking and
investment services to clients in selected markets through the RBS
Coutts brand.
RBS Insurance sells and underwrites retail and SME insurance over the
telephone and internet, as well as through brokers and partnerships. Its
brands include Direct Line, Churchill and Privilege, which sell general
insurance products direct to the customer, as well as Green Flag and
NIG. 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.