RBS 2012 Annual Report Download - page 267

RBS GROUP 2012
265
Key points*
x The Group maintains good relationships with multinational banks,
other financial institutions and large corporate clients.
x Exposure to Spain is driven by corporate lending and a sizeable
mortgage-backed securities covered bond portfolio. Exposure fell
further in most categories during 2012, driven by the sale of part of
the covered bond portfolio and a decline in corporate lending, as a
result of steps taken to de-risk the portfolio.
Government
x The Group has an active portfolio of Spanish government debt and
CDS exposures that can result in fluctuations between long and
short positions for HFT debt securities.
Financial institutions
x The Group’s largest exposure was AFS debt securities (mainly the
covered bond portfolio) of £4.8 billion at 31 December 2012, which
decreased by £1.6 billion during 2012, largely as a result of sales in
the first half of the year. The portfolio continued to perform
satisfactorily. However, the Group is monitoring the situation closely,
including undertaking stress analyses.
x Derivative exposure, mostly to Spanish international banks and a
few of the large regional banks, declined to £1.3 billion at 31
December 2012 from £1.9 billion at 31 December 2011. The
majority of this exposure was collateralised.
x Lending to financial institutions decreased to less than £0.1 billion at
31 December 2012 from £0.3 billion at 31 December 2011.
Corporate
x Lending decreased by £1.5 billion and off-balance sheet exposure
by £0.9 billion, due to reductions primarily in the commercial real
estate and electricity sectors. Commercial real estate lending
amounted to £1.6 billion at 31 December 2012, predominantly in
Non-Core. The majority of REIL and loan provisions relates to
commercial real estate lending and further decreased during 2012,
reflecting disposals and restructurings.
Non-Core (included above)
x At 31 December 2012, Non-Core had lending exposure to Spain of
£2.8 billion, a reduction of £1.0 billion or 26% since 31 December
2011. Commercial real estate (63%), construction (14%) and
electricity (9%) sectors accounted for the majority of the lending
exposure.
*unaudited