RBS 2012 Annual Report Download - page 430

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Notes on the consolidated accounts continued
20 Discontinued operations and assets and liabilities of disposal groups continued
(c) Assets and liabilities of disposal groups
2012
Direct
Line
Group Other Total 2011 2010
£m £m £m £m £m
Assets of disposal groups
Cash and balances at central banks — 18 18 127 184
Loans and advances to banks 2,036 76 2,112 87 651
Loans and advances to customers 881 982 1,863
19,405 5,013
Debt securities and equity shares 7,156 35 7,191 5 20
Derivatives 12 3
15 439 5,148
Intangible assets 750
— 750
15 —
Settlement balances — — — 14 555
Property, plant and equipment 222 1 223
4,749 18
Other assets 1,640 26 1,666 456 704
Discontinued operations and other disposal groups 12,697 1,141 13,838 25,297 12,293
Assets acquired exclusively with a view to disposal — 175 175 153 191
12,697 1,316 14,013 25,450 12,484
Liabilities of disposal groups
Deposits by banks — 1 1 1 266
Customer accounts — 753 753
22,610 2,267
Derivatives 4 3 7 126 5,042
Settlement balances — — — 8 907
Insurance liabilities 6,193
— 6,193
— —
Subordinated liabilities 529 — 529 — —
Other liabilities 2,541 138 2,679
1,233 925
Discontinued operations and other disposal groups 9,267 895 10,162 23,978 9,407
Liabilities acquired exclusively with a view to disposal — 8 8 17 21
9,267 903 10,170 23,995 9,428
Disposal groups at 31 December 2012 primarily comprise Direct Line
Group (DLG). To comply with EC state aid requirements, the Group has
agreed to cede control of DLG by the end of 2013 and divest completely
by the end of 2014. Following the successful initial public offering in
which the Group sold 34.7% of its shareholding, DLG was classified as a
disposal group and discontinued operation on 31 December 2012. On
being classified as held-for-sale, disposal groups are required to be
measured at the lower of carrying amount and fair value less costs to sell.
DLG’s carrying amount exceeded its fair value less costs to sell (based
on the quoted price for DLG shares on 31 December 2012) by £394
million and goodwill attributable to DLG has been written down by this
amount. The write down is recorded in other expenses within
discontinued operations.
At 31 December 2011, disposal groups comprised the RBS Aviation
Capital business which was sold in the second half of 2012 and the RBS
England and Wales and NatWest Scotland branch-based businesses,
along with certain SME and corporate activities across the UK (‘UK
branch-based businesses’). In October 2012 Santander announced its
withdrawal from the sale agreed in August 2010. Although the Group
continues to explore disposal options, sale within 12 months is no longer
highly probable; accordingly at 31 December 2012 the assets and
liabilities of this UK branch-based business ceased to be classified as a
disposal group. No adjustment was required to the carrying value of
these assets and liabilities on reclassification. In accordance with IFRS 5
‘Non-current Assets Held for Sale and Discontinued Operations’,
comparatives have not been restated.
In 2011, £80 million of allocated goodwill was written off against operating
expenses in respect of the UK branch-based businesses. No adjustment
was made in respect of the RBS Aviation Capital business.
The disposal of the RBS Sempra Commodities JV was substantially
completed in 2010. Certain contracts of the RBS Sempra Commodities
JV were sold in risk transfer transactions prior to being novated to the
purchaser, the majority of which completed during 2011.