RBS 2009 Annual Report Download - page 343

341RBS Group Annual Report and Accounts 2009
Financial statements
Notes on the accounts
38 Segmental analysis
(a) Divisions
Following a comprehensive strategic review, changes have been
made to the Group’s operating segments in 2009. A Non-Core
division has been created comprising those lines of business,
portfolios and individual assets that the Group intends to run off or
sell. Furthermore, Business Services (formerly Group Manufacturing)
is no longer reported as a separate division and its costs are now
allocated to the customer-facing divisions along with certain central
costs. UK Retail & Commercial Banking has been split into three
segments (UK Retail, UK Corporate and Wealth). Ulster Bank has
become a specific segment. The remaining elements of Europe &
Middle East Retail & Commercial Banking, Asia Retail & Commercial
Banking and Share of shared assets form part of Non-Core. The
segment measure is now Operating profit/(loss) before tax which
differs from Contribution used previously; it excludes certain
infrequent items and RFS Holdings minority interest, which is not an
operating segment of the Group. Comparative data have been
restated accordingly.
The directors manage the Group primarily by class of business and
present the segmental analysis on that basis. Segments charge
market prices for services rendered to other parts of the Group;
funding charges between segments are determined by Group
Treasury, having regard to commercial demands.
The Group’s activities are organised as follows:
UK Retail offers a comprehensive range of banking products and
related financial services to the personal market. It serves customers
through the Royal Bank and NatWest networks of branches and
ATMs in the United Kingdom, and also through telephone and
internet channels.
UK Corporate is a leading provider of banking, finance, and risk
management services to the corporate and SME sector in the United
Kingdom. It offers a full range of banking products and related
financial services through a nationwide network of relationship
managers, and also through telephone and internet channels. The
product range includes asset finance through the Lombard brand.
Wealth provides private banking and investment services in the UK
through Coutts & Co and Adam & Company; offshore banking
through RBS International, NatWest Offshore and Isle of Man Bank;
and international private banking through RBS Coutts.
Global Banking & Markets (GBM) 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. The division
is organised along six principal business lines: money markets; rates
flow trading; currencies and commodities; equities; credit markets
and portfolio management & origination.
Global Transaction Services ranks among the top five global
transaction services providers, offering global payments, cash and
liquidity management, and trade finance and commercial card
products and services. It includes the Group’s corporate money
transmission activities in the United Kingdom and the United States
as well as Global Merchant Services, the Group’s United Kingdom
and international merchant acquiring business.
Ulster Bank is the leading retail and commercial bank in Northern
Ireland and the third largest banking group on the island of Ireland.
It provides a comprehensive range of financial services through both
its Retail Markets division which has a network of branches and
operates in the personal and bancassurance sectors, and its
Corporate Markets division, which provides services to SME
business customers, corporates and institutional markets.
US Retail & Commercial provides financial services primarily through
the Citizens and Charter One brands. US Retail & Commercial is
engaged in retail and corporate banking activities through its branch
network in 12 states in the United States and through non-branch
offices in other states. It ranks among the top five banks in New
England.
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 Germany and
Italy. The Intermediary and Broker division sells general insurance
products through independent brokers.
Central Functions comprises group and corporate functions, such as
treasury, funding and finance, risk management, legal,
communications and human resources. The Centre manages the
Group’s capital resources and Group-wide regulatory projects and
provides services to the operating divisions.
Non-Core Division manages separately assets that the Group intends
to run off or dispose. The division contains a range of businesses
and asset portfolios primarily from the GBM division, including RBS
Sempra Commodities, linked to proprietary trading, higher risk profile
asset portfolios including excess risk concentrations, and other
illiquid portfolios. It also includes a number of other portfolios and
businesses, including regional markets businesses, that the Group
has concluded are no longer strategic.