RBS 2012 Annual Report Download - page 455

RBS GROUP 2012
453
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 2012. 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
1 year
More than
1 year but
less than
3 years
More than
3 years but
less than
5 years
Over
5 years 2012 2011 2010
£m £m £m £m £m £m £m
Contingent liabilities
Guarantees and assets pledged as collateral security 9,525 2,605 5,453 1,581 19,164 25,032 31,101
Other contingent liabilities 4,428 2,158 2,328 1,783 10,697 10,912 12,254
13,953 4,763 7,781 3,364 29,861 35,944 43,355
Commitments (1)
Undrawn formal standby facilities, credit lines and other
commitments to lend
- less than one year 83,461 — — — 83,461
100,092 117,581
- one year and over 12,703
39,185 64,901 15,558 132,347 139,871 149,241
Other commitments 1,753 101 121 1 1,976
2,912 4,154
97,917 39,286 65,022 15,559 217,784 242,875 270,976
Note:
(1) Includes liquidity facilities provided to Group sponsored conduits.
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.