RBS 2012 Annual Report Download - page 503

RBS GROUP 2012
501
Description of property and equipment
The Group operates from a number of locations worldwide, principally in
the UK. At 31 December 2012, the Royal Bank and NatWest had 617 and
1,452 retail branches, respectively, in the UK. Ulster Bank has a foot print
of 236 branches and an extensive network of business banking offices
across Northern Ireland and the Republic of Ireland. US Retail &
Commercial had 1,399 retail banking offices (including in-store branches)
covering Connecticut, Delaware, Illinois, Massachusetts, Michigan, New
Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island
and Vermont. A substantial majority of the UK branches are owned by the
Royal Bank, NatWest and their subsidiaries or are held under leases with
unexpired terms of over 50 years. The Group's principal properties
include its headquarters at Gogarburn, Edinburgh, its principal offices in
London at 135 and 280 Bishopsgate and the Drummond House
administration centre located at South Gyle, Edinburgh.
Total capital expenditure on premises (excluding investment properties),
computers and other equipment in the year ended 31 December 2012
was £801 million (2011 - £820 million; 2010 - £656 million).
Major shareholders
In December 2008, The Solicitor for the Affairs of Her Majesty's Treasury
(HM Treasury) acquired 22,854 million ordinary shares representing
57.9% of the company's issued ordinary share capital. During 2009, HM
Treasury acquired a further 16,791 million ordinary shares raising their
holding to 70.3% of the company's issued ordinary share capital.
In December 2009, HM Treasury acquired 51 billion B shares in the
company representing the entire issued B share capital. At 31 December
2012, HM Treasury’s holding in the company’s ordinary shares was
65.3%.
As far as the company is aware, there have been no significant changes
in the percentage ownership of major shareholders of the company's
ordinary, B and preference shares during the three years ended 27
February 2013. All shareholders within a class of the company's shares
have the same voting rights.
As at 31 December 2012, almost all of the company's US$ denominated
preference shares and American Depository Shares representing
ordinary shares were held by shareholders registered in the US. All other
shares were predominantly held by shareholders registered outside the
US.
Material contracts
The company and its subsidiaries are party to various contracts in the
ordinary course of business. Material contracts include the following:
Consortium and Shareholders Agreement (CSA)
On 28 May 2007, Fortis Bank Nederland, the company, Santander and
RFS Holdings entered into the CSA. Fortis Bank Nederland acceded to
the CSA on 26 July 2007. On 3 October 2008, the Dutch State acquired
Fortis Bank Nederland. On 24 December 2008 the Dutch State acceded
to the CSA following its acquisition of the shares held by Fortis Bank
Nederland in RFS Holdings pursuant to a Deed of Accession entered into
between RFS Holdings, the company, Fortis Bank Nederland, Santander
and the Dutch State. On 1 April 2010 the CSA was restated. It was the
subject of a further amendment on 18 July 2011. On 7 November 2012,
Stichting Administratiekantoor Beheer Financiële Instellingen (the
Foundation) acceded to the CSA (as amended and restated) as a
shareholder following its acquisition of the shares held by the Dutch State
in RFS Holdings pursuant to a Deed of Accession entered into between
RFS Holdings, the company, Santander, the Dutch State and the
Foundation. The Dutch State remains a party to the CSA. The CSA (as
amended and restated) governs the relationships amongst the parties
thereto in relation to the acquisition by RFS Holdings of ABN AMRO (now
RBS Holdings N.V.). The CSA (as amended and restated) details, inter
alia, the equity interests in RFS Holdings, the governance of RFS
Holdings, the arrangements for the transfer of certain ABN AMRO
businesses, assets and liabilities to the Dutch State (previously Fortis
Bank Nederland), the company and Santander, further funding
obligations of the Dutch State, the company and Santander where
funding is required by regulatory authorities in connection with the ABN
AMRO businesses, the allocation of taxes and conduct of tax affairs and
the steps that the Dutch State, the company and Santander expect to
take to enable the company to become the sole shareholder of RFS
Holdings.
B Share Acquisition and Contingent Capital Agreement
On 26 November 2009, the company and HM Treasury entered into the
Acquisition and Contingent Capital Agreement pursuant to which HM
Treasury subscribed for the initial B shares and the Dividend Access
Share (the "Acquisitions") and agreed the terms of HM Treasury's
subscription (the “Contingent Subscription”) for an additional £8 billion in
aggregate in the form of further B shares (the "Contingent B shares"),
which will be issued on the same terms as the initial B shares. The
Acquisitions were subject to the satisfaction of various conditions,
including the company having obtained the approval of its shareholders in
relation to the Acquisitions.
The company and HM Treasury further agreed the terms of the £8 billion
Contingent Subscription of the Contingent B shares in the Acquisition and
Contingent Capital Agreement. For a period of five years from 22
December 2009 or, if earlier, until the occurrence of a termination event
or until the company decides (with FSA consent) to terminate such
Contingent Subscription (the "Contingent Period"), if the Core Tier 1 ratio
of the company falls below five per cent (and if certain other conditions
are met) HM Treasury has committed to subscribe for the Contingent B
shares in no fewer than two tranches of £6 billion and £2 billion (or such
smaller amounts as the company and HM Treasury may agree). Any
unused portion of the £8 billion may be subscribed in one or more further
tranches.
The company may, subject to certain conditions, at any time terminate
the Contingent Subscription in whole or in part, with the consent of the
FSA. The company is required to pay an annual fee, for the Contingent
Period, in relation to the Acquisitions and the Contingent Subscription of
£320 million less four per cent per annum of the value of any B shares
subscribed for under the Contingent Subscription. Such fee is payable in
cash or, with HM Treasury's consent, by waiving certain UK tax reliefs
that are treated as deferred tax assets or through a further issue of B
shares to HM Treasury. The annual fee ceases to be payable on
termination of the Contingent Subscription and if the company terminates
the Contingent Subscription in part, the fee will reduce proportionately.