RBS 2012 Annual Report Download - page 44

42
Business review continued
Competition
The Group faces strong competition in all the markets it serves. Banks’
balance sheets have strengthened whilst loan demand remains subdued
as many customers continue to delever and the UK economy has
remained weak. Competition for retail deposits remains strong as
institutions continue to target strong and diverse funding platforms for
their balance sheets.
Competition for corporate and institutional customers in the UK and
abroad is from UK banks and from large foreign universal banks that offer
combined investment and commercial banking capabilities. In addition,
the Group’s Markets division faces strong competition from dedicated
investment banks. In asset finance, the Group competes with banks and
specialist asset finance providers, both captive and non-captive. In
European and Asian corporate and institutional banking markets the
Group competes with the large domestic banks active in these markets
and with the major international banks.
In the small business banking market, the Group competes with other UK
clearing banks, specialist finance providers and building societies.
In the personal banking segment, the Group competes with UK clearing
banks and building societies, major retailers and life assurance
companies. In the mortgage market, the Group competes with UK
clearing banks and building societies. The ambitions of non-traditional
players in the UK market remain strong, with new entrants active and
potentially seeking to build their platforms by acquiring businesses made
available through restructuring of incumbents. The Group distributes life
assurance products to banking customers in competition with
independent advisors and life assurance companies.
In the UK credit card market large retailers and specialist card issuers are
active in addition to the UK banks. In addition to physical distribution
channels, providers compete through direct marketing activity and the
internet.
In Wealth Management, The Royal Bank of Scotland International
competes with other UK and international banks to offer offshore banking
services. Coutts and Adam & Company compete as private banks with
UK clearing and private banks, and with international private banks.
Competition in wealth management remains strong as banks maintain
their focus on competing for affluent and high net worth customers.
Direct Line Group competes in personal lines insurance and, to a more
limited extent, in commercial insurance. There is strong competition from
a range of insurance companies which now operate telephone and
internet direct sales businesses. Competition in the UK motor market
remains intense, and price comparison internet sites now play a major
role in the marketplace. These sites have extended their scope to home
insurance and other lines. Direct Line Group also competes with local
insurance companies in the direct motor insurance markets in Italy and
Germany.
In Ireland, Ulster Bank competes in retail and commercial banking with
the major Irish banks and building societies, and with other UK and
international banks and building societies active in the market. The
challenging conditions in the Irish economy persist and many of the
domestic Irish banks have required State support and are engaged in
significant restructuring actions.
In the United States, RBS Citizens competes in the New England, Mid-
Atlantic and Mid-West retail and mid-corporate banking markets with local
and regional banks and other financial institutions. The Group also
competes in the US in large corporate lending and specialised finance
markets, and in fixed-income trading and sales. Competition is principally
with the large US commercial and investment banks and international
banks active in the US. The economic recovery in the US is proving
weaker than expected and loan demand is weak in Citizens’ markets.