RBS 2011 Annual Report Download - page 402

400 RBS Group 2011
32 Memorandum items
Contingent liabilities and commitments
The amounts shown in the table below are intended only to provide an indication of the volume of business outstanding at 31 December 2011. Although
the Group is exposed to credit risk in the event of non-performance of the obligations undertaken by customers, the amounts shown do not, and are not
intended to, provide any indication of the Group's expectation of future losses.
Less than
1year
More than
1year but
less than
3years
More than
3years but
less than
5years
Over
5years 2011 2010 2009
£m £m £m £m £m £m £m
Contingent liabilities
Guarantees and assets pledged as collateral security 13,512 3,514 2,082 5,924 25,032 31,101 40,008
Other contingent liabilities 4,631 1,958 2,373 1,950 10,912 12,254 14,012
18,143 5,472 4,455 7,874 35,944 43,355 54,020
Commitments (1)
Undrawn formal standby facilities, credit lines and other
commitments to lend
-less than one year 100,092 — — — 100,092 117,581 127,423
- one year and over 17,626 38,175 65,441 18,629 139,871 149,241 164,211
Other commitments 721 132 2,059 — 2,912 4,154 6,007
118,439 38,307 67,500 18,629 242,875 270,976 297,641
Note:
(1) Includes liquidity facilities provided to Group sponsored conduits as detailed on page 125.
Banking commitments and contingent obligations, which have been
entered into on behalf of customers and for which there are
corresponding obligations from customers, are not included in assets and
liabilities. The Group's maximum exposure to credit loss, in the event of
non-performance by the other party and where all counterclaims,
collateral or security proves valueless, is represented by the contractual
nominal amount of these instruments included in the table above. These
commitments and contingent obligations are subject to the Group's
normal credit approval processes.
Contingent liabilities
Guarantees - the Group gives guarantees on behalf of customers. A
financial guarantee represents an irrevocable undertaking that the Group
will meet a customer's obligations to third parties if the customer fails to
do so. The maximum amount that the Group could be required to pay
under a guarantee is its principal amount as disclosed in the table above.
The Group expects most guarantees it provides to expire unused.
Other contingent liabilities - these include standby letters of credit,
supporting customer debt issues and contingent liabilities relating to
customer trading activities such as those arising from performance and
customs bonds, warranties and indemnities.
Commitments
Commitments to lend - under a loan commitment the Group agrees to
make funds available to a customer in the future. Loan commitments,
which are usually for a specified term may be unconditionally cancellable
or may persist, provided all conditions in the loan facility are satisfied or
waived. Commitments to lend include commercial standby facilities and
credit lines, liquidity facilities to commercial paper conduits and unutilised
overdraft facilities.
Other commitments - these include documentary credits, which are
commercial letters of credit providing for payment by the Group to a
named beneficiary against presentation of specified documents, forward
asset purchases, forward deposits placed and undrawn note issuance
and revolving underwriting facilities, and other short-term trade related
transactions.
Notes on the consolidated accounts continued