RBS 2011 Annual Report Download - page 142

140 RBS Group 2011
Risk management: Credit risk continued
Problem debt management continued
The mortgage arrears information for retail accounts in forbearance and related provision arrangements are shown in the table below:
No missed payments 1-3 months in arrears >3 months in arrears Total
Balance Provision Balance Provision Balance Provision Balance Provision
Accounts
forborne
Arrears status and provisions £m £m £m £m £m £m £m £m %
2011
UK Retail (1,2) 3,677 16 351 13 407 59 4,435 88 4.7
Ulster Bank (1,2) 893 78 516 45 421 124 1,830 247 9.1
Citizens — — 91 10 89 10 180 20 0.8
Wealth 121 — — — 2 — 123 — 1.3
Total 4,691 94 958 68 919 193 6,568 355 4.4
Notes:
(1) Includes all forbearance arrangements regardless of whether or not the customer is experiencing financial difficulty.
(2) Comprises the current stock position of forbearance deals agreed since January 2008 for UK Retail and since July 2008 for Ulster Bank.
(3) Refer to page 155 for details of the proportion of UK Retail and Citizens mortgage loans that have missed three or more payments, compared to the forbearance population above.
The incidence of the main types of retail forbearance on the balance sheet as at 31 December 2011 is analysed below. For a small proportion of
mortgages, more than one forbearance type applies.
UK Retail (1) Ulster Bank (1) Citizens Wealth Total (2)
Forbearance arrangements £m £m £m £m £m
2011
Interest only conversions 1,269 795 — 3 2,067
Term extensions - capital repayment and interest only 1,805 58 — 97 1,960
Payment concessions/holidays 198 876 180 — 1,254
Capitalisation of arrears 864 101 — — 965
Other 517 — — 23 540
Total 4,653 1,830 180 123 6,786
Notes:
(1) Comprises the current stock position of forbearance deals agreed since January 2008 for UK Retail and since July 2008 for Ulster Bank.
(2) As an individual case can include more than one type of arrangement, the analysis in the table above can exceed the total forbearance.
For unsecured portfolios in UK Retail, 1.1% of the total unsecured
population was subject to forbearance at 31 December 2011 and
comprises either debt consolidation loans provided to customers
subject to collections activity who do not meet the Group’s standard
underwriting criteria or repayment arrangements where the customer's
overdraft limit is increased to accommodate account excesses and/or
loan arrears. Additionally, support is provided to customers
experiencing financial difficulties through ǥbreathing space initiatives’
on all unsecured products, including credit cards, whereby a 30-day
period is given to allow customers to establish a debt repayment plan.
During this time, the Group suspends collection activity and a further
extension of 30 days can be granted if progress is made and
discussions are continuing. Arrears continue to accrue for customer
loans benefiting from breathing space.
Within Citizens, granting of forbearance is significantly less extensive
for non real estate portfolios, as it is predominantly restricted to the
granting of short-term (1-3 months) loan extensions to customers to
alleviate the financial burden caused by temporary hardship. Such
extensions are offered only if a customer has demonstrated a capacity
and willingness to pay following the extension term. The number and
frequency of extensions are limited per customer. Additionally, in the
case of loans secured by vehicles and credit cards, Citizens may offer
temporary interest rate modifications but no principal reduction. For
loans secured by vehicles, this is now restricted to three-month interest
rate modifications. For credit cards, customers may be offered short-
term (6-12 months) or longer-term (up to 60 months) interest rate
modifications. Citizens may also provide forbearance to student loan
borrowers consistent with the policy guidelines of the US Office of the
Comptroller of the Currency.
*unaudited
Business review Risk and balance sheet management continued