RBS 2008 Annual Report Download - page 8

7RBS Group Annual Report and Accounts 2008
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Global Banking & Markets
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.
The poor results recorded by GBM in 2008 should not be allowed
to disguise the fact that many businesses produced good
performances, most notably rates and currencies, and that the
activities which directly support our relationships with customers
provide the platform for a return to sustainable profitability.
Total income before credit market write-downs and unusual
items was £10,214 million, down 6% from 2007. In addition
to losses on previously identified credit market exposures of
£7,781 million, GBM incurred £5,776 million in trading asset
write-downs. Although direct expenses were cut by 18% as
we addressed the challenges facing the business, credit
impairments rose sharply. The operating loss for the year was
£10,994 million. On an indicative basis, the return on equity
(‘ROE’) of GBM was -35%.
These losses occurred in relatively narrow parts of the
business, focused on proprietary trading, structured credit and
counterparty exposure. More than 50% of losses pertained to
ABN AMRO-originated portfolios.
Despite the disappointing headlines and the difficulties
encountered by individual business lines, market volatility
provided opportunities. The rates and currencies business
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