RBS 2008 Annual Report Download - page 280

279RBS Group Annual Report and Accounts 2008
Supervision
United Kingdom
The UK Financial Services Authority (FSA) is the consolidated
supervisor of the Group. As at 31 December 2008, 31 companies in the
Group (excluding subsidiaries of ABN AMRO), spanning a range of
financial services sectors (banking, insurance and investment
business), were authorised to conduct financial activities regulated by
the FSA.
The UK authorised banks in the Group include the Royal Bank, NatWest,
Coutts & Co and Ulster Bank Limited. Wholesale activities, other than
Group Treasury activities, are concentrated in the Group’s Global
Markets division and are undertaken under the names of the Royal
Bank and NatWest. UK retail banking activities are managed by
Regional Markets, RBS UK. The exception is Ulster Bank Limited, which
is run as a separate division within the Group. Ulster Bank Group will
move to a single brand in the Republic of Ireland, with First Active
merging with Ulster Bank. Ulster Bank Limited provides banking
services in Northern Ireland while the banking service in the Republic of
Ireland is provided by Ulster Bank Ireland Limited which is primarily
supervised by the Irish Financial Services Regulatory Authority.
Investment management business is principally undertaken by
companies in the Regional Markets division, including Coutts & Co,
Adam & Company Investment Management Limited, and in the Global
Markets division through RBS Asset Management Limited.
General insurance business is principally undertaken by Direct Line
Insurance plc and Churchill Insurance Company Limited. Life assurance
business is principally undertaken by Royal Scottish Assurance plc and
National Westminster Life Assurance Limited (in partnership with Aviva plc).
United States
The Group is both a bank holding company and a financial holding
company within the meaning of the US Bank Holding Company Act of
1956. As such, it is subject to the regulation and supervision of the
Board of Governors of the Federal Reserve System (the “Federal
Reserve”). Among other things, the Group’s direct and indirect activities
and investments in the United States are limited to those that are
‘financial in nature’ or ‘incidental’ or ‘complementary’ to a financial
activity, as determined by the Federal Reserve. The Group is also
required to obtain the prior approval of the Federal Reserve before
acquiring directly or indirectly, the ownership or control of more than 5%
of any class of the voting shares of any US bank or holding company.
Under current Federal Reserve policy, the Group is required to act as a
source of financial strength for its US bank subsidiaries. Among other
things, this source of strength obligation could require the Group to
inject capital into any of its US bank subsidiaries if any of them became
undercapitalised.
The Group’s US bank and non-bank subsidiaries and the Royal Bank’s
US branches are also subject to supervision and regulation by a variety
of other US regulatory agencies. RBS Citizens, NA is supervised by the
Office of the Comptroller of the Currency, which is charged with the
regulation and supervision of nationally chartered banks. Citizens
Financial Group is under the supervision of the Federal Reserve as a
bank holding company. Citizens Bank of Pennsylvania is subject to the
regulation and supervision of the Pennsylvania Department of Banking
and the US Federal Deposit Insurance Corporation. The Royal Bank’s
New York branch is supervised by the New York State Banking
Department, and its Connecticut branch is supervised by the
Connecticut Department of Banking. Both branches are also subject to
supervisory oversight by the Federal Reserve, through the Federal
Reserve Bank of Boston.
The Group’s US insurance agencies are regulated by state insurance
authorities. The Group’s US broker dealer, Greenwich Capital Markets,
Inc., is subject to regulation and supervision by the US Securities and
Exchange Commission (SEC) and the Financial Industry Regulatory
Authority (FINRA) with respect to its securities activities. The futures
activities of Greenwich Capital Markets, Inc. are subject to regulation
and oversight by the US Commodity Futures Trading Commission
(CFTC) and the Chicago Board of Trade (CBOT). The Group's US
commodities business, RBS Sempra Commodities, is primarily regulated
by the Federal Energy Regulatory Commission (FERC) and CFTC.
The Group is subject to extensive regulations that impose obligations on
financial institutions to maintain appropriate policies, procedures and
controls to insure compliance with the rules and regulations to which
they are subject, in particular to detect, prevent and report money
laundering and terrorist financing and to ensure compliance with
economic sanctions against designated foreign countries, nationals and
others. Anti-money laundering, anti-terrorism and economic sanctions
regulations have become a major focus of US government policy
relating to financial institutions and are rigorously enforced by US
government agencies.
Netherlands
The consolidated supervisor of ABN AMRO is the Dutch Central Bank,
De Nederlandsche Bank (DNB). The DNB operates as prudential
supervisor of banks and insurance companies and also as part of the
European System of Central Banks.
Other jurisdictions
The Group operates in over 50 countries through a network of branches,
local banks and non-bank subsidiaries.