RBS 2008 Annual Report Download - page 68

67RBS Group Annual Report and Accounts 2008
Central items
Pro forma Statutory
2008 2007 2008 2007
£m £m £m £m
Funding costs 1,331 1,203 1,330 623
Departmental costs 665 620 665 438
Other corporate costs (4) (271) (1,320) (509)
1,992 1,552 675 552
Allocation of manufacturing costs 241 225 ——
Total central Items* 2,233 1,777 675 552
* excluding one-off items
2008 compared with 2007 – pro forma
Central costs increased by 26% to £2,233 million.
Funding costs rose by £128 million, 11% to £1,331 million primarily due
to higher cost of funds including those relating to the Bank of England
Special Liquidity Scheme. The Group seeks to hedge its interest rate
risk economically, and it is not always possible to achieve hedge
accounting in accordance with IFRS. The movements in interest rates,
currencies and inflation indices, particularly in the latter part of 2008,
resulted in volatility for accounting purposes, leading to a charge of
£204 million compared with a credit of £102 million in 2007. These
costs were largely offset by increased dividends from Bank of China
and benefits from the additional capital raised during the year.
Departmental costs rose by 7% to £665 million, reflecting an increase
in central function headcount as well as higher Basel II costs.
Other corporate items amounted to a net credit of £4 million, compared
with a net credit of £271 million in 2007. The reduction reflects the
Financial Services Compensation Scheme levy of £150 million and
gains realised in 2007.
2008 compared with 2007 – statutory
Central costs increased by £123 million to £675 million.
Funding costs rose by £707 million to £1,330 million, reflecting higher
funding costs for the full year following the acquisition of ABN AMRO in
October 2007.
Departmental costs rose by £227 million to £665 million, including the
full year impact of the acquisition of ABN AMRO.
Other corporate costs amounted to a net credit of £1,320 million,
compared with a net credit of £509 million in 2007. The increase
reflects higher gains in the fair value of own debt and the profit on sale
of Tesco Personal Finance in 2008.