RBS 2012 Annual Report Download - page 476

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Notes on the consolidated accounts continued
41 Related parties continued
National Loan Guarantee Scheme
The Group participated in the National Loan Guarantee Scheme (NLGS),
providing loans and facilities to eligible customers at a discount of one
percent. It did not issue any guaranteed debt under the scheme and
consequently, it was not committed to providing a particular volume of
reduced rate facilities. Lending under the scheme, amounting to £898
million at 31 December 2012, is accounted for in accordance with the
Group’s accounting policy for loans and receivables. The NLGS was
superseded by the Funding for Lending Scheme.
The Funding for Lending Scheme
The Funding for Lending Scheme was launched in July 2012. Under the
scheme UK banks and building societies are able to borrow UK treasury
bills from the Bank of England in exchange for eligible collateral during
the drawdown period (1 August 2012 to 31 January 2014). Borrowing is
limited to 5% of the participant’s stock of loans to the UK non-financial
sector as at 30 June 2012, plus any expansion in lending from that date
to the end of 2013. Eligible collateral comprises all collateral eligible for
the Bank of England’s discount window facility. The term of each
transaction is four years from the date of drawdown. The price for
borrowing UK treasury bills under the scheme depends on the
participant’s net lending to the UK non-financial sector between 30 June
2012 and the end of 2013. If lending is maintained or expanded over that
period, the fee is 0.25% per year on the amount borrowed. If lending
declines, the fee increases by 0.25% for each 1% fall in lending, up to a
maximum fee of 1.5%. As at 31 December 2012, the Group had
borrowed UK treasury bills with a fair value £749.million under the
scheme.
Other related parties
(a) In their roles as providers of finance, Group companies provide
development and other types of capital support to businesses. These
investments are made in the normal course of business and on arm's
length terms. In some instances, the investment may extend to
ownership or control over 20% or more of the voting rights of the
investee company. However, these investments are not considered
to give rise to transactions of a materiality requiring disclosure under
IAS 24.
(b) The Group recharges The Royal Bank of Scotland Group Pension
Fund with the cost of administration services incurred by it. The
amounts involved are not material to the Group.
(c) In accordance with IAS 24, transactions or balances between Group
entities that have been eliminated on consolidation are not reported.
(d) The captions in the primary financial statements of the parent
company include amounts attributable to subsidiaries. These
amounts have been disclosed in aggregate in the relevant notes to
the financial statements.
42 Post balance sheet events
There have been no significant events between the year end and the
date of approval of these accounts which would require a change to or
disclosure in the accounts.