RBS 2011 Annual Report Download - page 39

RBS Group 2011 37
Non-Core division manages separately assets that the Group intends to
run off or dispose of. The division contains a range of businesses and
asset portfolios primarily from the GBM division, 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.
Business Services supports the customer-facing businesses and
provides operational technology, customer support in telephony, account
management, lending and money transmission, global purchasing,
property and other services. Business Services drives efficiencies and
supports income growth across multiple brands and channels by using a
single, scalable platform and common processes wherever possible. It
also leverages the Group's purchasing power and is the Group's centre of
excellence for managing large-scale and complex change. For reporting
purposes, Business Services costs are allocated to the divisions above. It
is not deemed a reportable segment.
Organisational change
In January2012, the Group announced changes to its wholesale banking
operations in light of a changed market and regulatory environment. The
changes will see the reorganisation of the Group’s wholesale businesses
into ‘Markets’ and ‘International Banking’ and the exit and downsizing of
selected activities. The changes will ensure the wholesale businesses
continue to deliver against the Group’s strategy.
The changes will include an exit from cash equities, corporate brokering,
equity capital markets and mergers and acquisitions businesses.
Significant reductions in balance sheet, funding requirements and cost
base in the remaining wholesale businesses will be implemented.
Existing GBM and GTS divisions will be reorganised as follows:
xThe ‘Markets’ business will maintain its focus on fixed income, with
strong positions in debt capital raising, securitisation, risk
management, foreign exchange and rates. It will serve the corporate
and institutional clients of all Group businesses.
xGBM's corporate banking business will combine with the
international businesses of our GTS arm into a new ‘International
Banking’ unit and provide clients with a 'one-stop shop' access
to the Group’s debt financing, risk management and payments
services. This international corporate business will be self-funded
through its stable corporate deposit base.
xThe domestic small and mid-size corporates currently served within
GTS will be managed within RBS's domestic corporate banking
businesses in the UK, Ireland (Ulster Bank) and the US (US Retail
and Commercial).
Our wholesale business will be retaining its international footprint to
ensure that it can serve our customers' needs globally. We believe, that
despite current challenges to the sector, wholesale banking services can
play a central role in supporting cross border trade and capital flows,
financing requirements and risk management and we remain committed
to this business.
Going forward the Group will comprise the following segments:
xRetail and Commercial
- UK Retail
- UK Corporate
- Wealth
- US Retail and Commercial
- Ulster Bank
- International Banking
xMarkets
xRBS Insurance
xGroup Centre
xCore
xNon-Core
Business divestments
To comply with EC State Aid requirements the Group agreed a series of
restructuring measures to be implemented over a four year period from
December 2009. This supplements the measures in the Strategic Plan
previously announced by the Group. These include divesting RBS
Insurance, 80.01% of GMS (completed in 2010) and substantially all of
RBS Sempra Commodities JV business (largely completed in 2010), as
well as divesting the RBS branch-based business in England and Wales
and the NatWest branches in Scotland, along with the Direct SME
customers across the UK.