RBS 2010 Annual Report Download - page 386

43 Related parties continued
As at 31 December balances with the UK Government and UK Government controlled bodies were:
2010 2009 2008
Central
government
(including
the Bank
of England)
Local
government
Banks,
financial
corporations
and public
corporations Total
Central
government
(including
the Bank
of England)
Local
government
Banks,
financial
corporations
and public
corporations Total
Central
government
(including
the Bank
of England)
Local
government
Banks,
financial
corporations
and public
corporations Total
£m £m £m £m £m £m £m £m £m £m £m £m
Assets
Balances at central banks 18,862 — — 18,862
16,617 — — 16,617 393 — — 393
Loans and advances to
banks — — 674 674 —— 664 664 — — 1,081 1,081
Loans and advances to
customers 46 1,427 1,170 2,643 53 1,231 340 1,624 5 721 468 1,194
Debt securities 13,331 — 155 13,486
19,681 — 100 19,781 21,628 — 113 21,741
Derivatives 73 4 96 173
204 62 7 273 1,286 64 17 1,367
Other 494 — — 494 4,514 — 3 4,517 249 — — 249
Liabilities
Deposits by banks 147 — 419 566 —— 436 436 26,541 — 633 27,174
Customer accounts 935 5,002 641 6,578 1,480 3,646 668 5,794 1,536 3,320 598 5,454
Derivatives 207 23 920 1,150 156 39 628 823 276 78 29 383
Other 186 — — 186 118 — — 118 176 — — 176
No impairment losses were recognised by the Group in 2010, 2009 or 2008 in respect of balances with UK Government and UK Government controlled
bodies.
There were no balances between the company and the UK Government and UK Government controlled bodies at 31 December 2010, 2009 and 2008.
Notes:
(1) In addition to UK Government's shareholding in the Group, the UK Government and UK Government controlled bodies may hold debt securities, subordinated liabilities and other liabilities or shares
issued by the Group in the normal course of their business. It is not practicable to ascertain and disclose these amounts.
(2) Certain of the liability balances are secured.
Asset Protection Scheme
On 22 December 2009, the Group entered into an agreement (the Asset
Protection Scheme (APS), with HM Treasury (HMT), acting on behalf of
the UK Government, under which the Group purchased credit protection
over a portfolio of specified assets and exposures (covered assets) from
HMT. The portfolio of covered assets has a par value of £282 billion. The
protection is subject to a first loss of £60 billion and covers 90% of
subsequent losses. Once the first loss has been exhausted, losses and
recoveries in respect of assets for which a trigger event - failure to pay,
bankruptcy or restructuring - has occurred are included in the balance
receivable under the APS. Receipts from HMT will, over time, amount to
90% of cumulative losses (net of 90% of cumulative recoveries) on the
portfolio of covered assets less the first loss amount.
The Group has a right to terminate the APS at any time provided that the
Financial Services Authority has confirmed in writing to HMT that it has
no objection to the proposed termination. On termination the Group must
pay HMT the higher of the regulatory capital relief received and £2.5
billion less premiums paid plus the aggregate of amounts received from
the UK Government under the APS.
HMT has the right to appoint step-in managers to carry out any oversight,
management or additional functions on behalf of HMT to ensure that the
covered assets are managed and administered in compliance with the
agreed terms and conditions.
This right is exercisable if certain step-in triggers occur. These include:
xlosses on covered assets in total exceed 125% of the first loss
amount or losses on an individual covered asset class exceed
specified thresholds;
xabreach of specified obligations in the APS rules or the accession
agreement;
xthe Group has failed or is failing to comply with any of the conditions
in the APS rules in relation to asset management, monitoring and
reporting, and governance and oversight and such failure is
persistent and material or it is evidence of a systematic problem;
and
xmaterial or systematic data deficiencies in the information provided
to HMT in accordance with the terms of APS.
HMT may at any time elect to cease to exercise its step-in rights in whole
or part when it is satisfied that the step-in triggers have been remedied.
In consideration for the protection provided by the APS, the Group paid a
premium of £700 million during 2010 (2009 - £1,400 million). Quarterly
premiums of £125 million are payable from 31 December 2011 and
subsequently until the earlier of 2099 and the termination of the
agreement.
RBS Group 2010384
Notes on the accounts continued