RBS 2012 Annual Report Download - page 502

Supervision
United Kingdom
The UK Financial Services Authority (FSA) is currently the consolidated
supervisor of the Group. As at 31 December 2012, 22 companies in the
Group, spanning a range of financial services sectors (banking, insurance
and investment business), were authorised to conduct financial activities
regulated by the FSA.
From 1 April 2013, the FSA’s responsibilities will be split between two
bodies: the Prudential Regulation Authority (PRA) and the Financial
Conduct Authority (FCA). At that point, the PRA will become the
consolidated supervisor of the Group. The FSA have already anticipated
the new structure by creating Prudential and Conduct business units in
April 2012 and separating the supervision teams for each dual regulated
firm between those units from that time.
The UK authorised banks in the Group include The Royal Bank of
Scotland plc, National Westminster Bank Plc, Coutts & Co and Ulster
Bank Limited. Wholesale activities, other than Group Treasury activities,
are concentrated in the Group's Markets, International Banking and UK
Corporate Banking divisions, and are undertaken under the names of The
Royal Bank of Scotland plc and National Westminster Bank Plc. UK retail
banking activities are managed by the UK Retail division and by Ulster
Bank Limited in Northern Ireland. The banking service in the Republic of
Ireland is provided by Ulster Bank Ireland Limited, which is supervised by
the Central Bank of Ireland.
Investment management business is principally undertaken by
companies in the Wealth division, including Coutts & Co, Adam &
Company Investment Management Limited, and in the Markets and
International Banking divisions, through RBS Asset Management Limited
and The Royal Bank of Scotland plc.
General insurance business is principally undertaken by U K Insurance
Limited.
The Group is subject to extensive regulations that impose obligations on
financial institutions to maintain appropriate policies, procedures and
controls to ensure compliance with the rules and regulations to which
they are subject.
United States
RBSG is both a bank holding company and a financial holding company
within the meaning of the US Bank Holding Company Act of 1956. As
such, it is subject to the regulation and supervision of the Board of
Governors of the Federal Reserve System (the “Federal Reserve”).
Among other things, the Group's direct and indirect activities and
investments in the United States are limited to those that are 'financial in
nature' or 'incidental' or 'complementary' to a financial activity, as
determined by the Federal Reserve. The Group is also required to obtain
the prior approval of the Federal Reserve before acquiring directly or
indirectly, the ownership or control of more than 5% of any class of the
voting shares of any US bank or holding company. Under current Federal
Reserve policy, the Group is required to act as a source of financial
strength for its US bank subsidiaries. Among other things, this source of
strength obligation could require the Group to inject capital into any of its
US bank subsidiaries if any of them became undercapitalised.
Anti-money laundering, anti-terrorism and economic sanctions
regulations are a major focus of the US government for financial
institutions and are rigorously enforced by US government agencies.
The Group's US bank and non-bank subsidiaries and the Royal Bank's
US branches are also subject to supervision and regulation by a variety
of other US regulatory agencies. RBS Citizens N.A. is supervised by the
Office of the Comptroller of the Currency, which is charged with the
regulation and supervision of nationally chartered banks. RBS
Citizens N.A. owns CCO Investments Services Corp., a US broker dealer
subject to regulation and supervision by the US Securities and Exchange
Commission (SEC) and the Financial Industry Regulatory Authority
(FINRA) with respect to its securities activities. Citizens Bank of
Pennsylvania is subject to the regulation and supervision of the US
Federal Deposit Insurance Corporation and the Pennsylvania Department
of Banking. Both banks are subject to supervision and regulation by the
Consumer Financial Protection Bureau (CFPB). The Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010 established the
CFPB.
RBS Citizens Financial Group, Inc. is under the supervision of the
Federal Reserve as a bank holding company. The Royal Bank's New
York branch is supervised by the New York State Department of
Financial Services and the Federal Reserve Bank of New York, and its
Connecticut branch is supervised by the Connecticut Department of
Banking. Both branches are also subject to supervisory oversight by the
Federal Reserve Bank of Boston.
The Group's primary US broker dealer, RBS Securities Inc. (RBSSI),
formerly known as Greenwich Capital Markets, Inc., is also subject to
regulation and supervision by the SEC and FINRA with respect to its
securities activities. The futures activities of RBSSI are subject to
regulation and oversight by the US Commodity Futures Trading
Commission and the Chicago Mercantile Exchange Group-owned
exchanges.
Netherlands
The consolidated supervisor of RBS N.V. is the De Nederlandsche Bank
(DNB). The DNB operates as independent central bank and prudential
supervisor of banks, insurance companies, pension funds and securities
firms domiciled in the Netherlands, and also as part of the European
System of Central Banks.
Other jurisdictions
The Group operates in over 45 countries through a network of branches,
local banks and non-bank subsidiaries and these activities are subject to
supervision in most cases by a local regulator or central bank.
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Additional information continued