RBS 2012 Annual Report Download - page 62

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Business review continued
Operating expenses and insurance claims continued
2011 compared with 2010 - managed
Group expenses were 7% lower in 2011, driven by cost savings achieved
as a result of the cost reduction programme and Non-Core run-off, largely
reflecting the disposal of RBS Sempra and specific country exits.
Staff costs fell 9%, driven by lower Markets and International Banking
variable compensation as a result of its decrease in revenues, and in
Non-Core, given the impact of a 32% reduction in headcount and
continued business disposals and country exits.
General insurance claims were £1,730 million lower, mainly due to the
non-repeat of bodily injury reserve strengthening in 2010, de-risking of
the motor book, more benign weather in 2011 and claims in Non-Core
decreasing as legacy policies ran-off.
The Group’s cost reduction programme delivered cost savings with an
underlying run rate of over £3 billion by the end of 2011.
2011 compared with 2010 - statutory
Group expenses fell by 2% in 2011, driven by cost savings achieved as a
result of the cost reduction programme and Non-Core run-off, largely
reflecting the disposal of RBS Sempra and specific country exits, partially
offset by Payment Protection Insurance costs.
Staff costs fell 11%, driven by lower Markets and International Banking
discretionary compensation as a result of its decrease in revenues, and in
Non-Core, given the impact of a 32% reduction in headcount and
continued business disposals and country exits.
In May 2011, following the decision of the British Bankers’ Association
not to appeal the judgement of the judicial review, the Group recorded a
provision of £850 million in respect of the costs of Payment Protection
Insurance redress.
The Group’s cost reduction programme delivered cost savings with an
underlying run rate of over £3 billion by the end of 2011.
Integration costs
2012 2011 2010
£m £m £m
Staff costs — 38 210
Premises and equipment (2) 6 3
Other administrative expenses 2 51 143
Depreciation and amortisation — 11 20
— 106 376
Note:
(1) Integration costs in 2011 excluded a £2 million charge included within net interest income and a loss of £3 million within other operating income in respect of integration activities.
2012 compared with 2011
Integration costs were nil compared with £106 million in 2011. Integration
costs decreased primarily due to a reduction of RBS N.V. (formerly ABN
AMRO) integration activity during the year.
2011 compared with 2010
Integration costs were £106 million compared with £376 million in 2010.
Integration costs decreased primarily due to a reduction of RBS N.V.
(formerly ABN AMRO) integration activity during the year.
Accruals in relation to integration costs are set out below.
At
1 January
2012
(Credit)/charge
to income
statement
- continuing
operations
Utilised
during
the year
At
31 December
2012
£m £m £m £m
Premises and equipment 11 (2) — 9
Other administrative expenses 3 2 — 5
14 — — 14