RBS 2013 Annual Report Download - page 106
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Business review
104
Description of business
Introduction
The Royal Bank of Scotland Group plc is the holding company of a large
global banking and financial services group. Headquartered in Edinburgh,
the Group operates in the United Kingdom, the United States and
internationally through its principal subsidiaries, the Royal Bank and
NatWest. Both the Royal Bank and NatWest are major UK clearing
banks. In the United States, the Group's subsidiary RBS Citizens is a
large commercial banking organisation. Globally, the Group has a
diversified customer base and provides a wide range of products and
services to personal, commercial and large corporate and institutional
customers.
Following the placing and open offers in December 2008 and in April
2009, HM Treasury owned approximately 70.3% of the enlarged ordinary
share capital of the company. In December 2009, the company issued a
further £25.5 billion of new capital to HM Treasury. This new capital took
the form of B shares, which do not generally carry voting rights at general
meetings of ordinary shareholders but are convertible into ordinary
shares and qualify as Core Tier 1 capital. Following the issuance of the B
shares, HM Treasury's holding of ordinary shares of the company
remained at 70.3% although its economic interest rose to 84.4%.
At 31 December 2013, HM Treasury’s holding in the company’s ordinary
shares was 63.9% and its economic interest was 80.2%.
The Group had total assets of £1,028 billion and owners' equity of £59
billion at 31 December 2013. The Group's risk asset ratios at 31
December 2013 were a Total capital ratio of 16.5%, a Core Tier 1 capital
ratio of 10.9% and a Tier 1 capital ratio of 13.1%.
Organisational structure
The Group’s activities during 2013 were organised on a divisional basis
as follows:
UK Retail offers a comprehensive range of banking products and related
financial services to the personal market. It serves customers through a
number of channels including: the RBS and NatWest network of
branches and ATMs in the United Kingdom, telephony, online and
mobile. UK Retail is committed to serving customers well, making
banking easier and convenient whilst ensuring that we do business in an
open, honest and sustainable manner.
UK Corporate is a leading provider of banking, finance and risk
management services to the corporate and SME sector in the United
Kingdom. It offers a full range of banking products and related financial
services through a nationwide network of relationship managers, and also
through telephone and internet channels. The product range includes
invoice finance through the RBSIF brand and asset finance through the
Lombard brand.
Wealth provides private banking and investment services in the UK
through Coutts & Co and Adam & Company, offshore banking through
RBS International, NatWest Offshore and Isle of Man Bank, and
international private banking through Coutts & Co Ltd.
International Banking serves the world’s largest companies with a leading
client proposition focused on financing, risk management and transaction
services. It serves as the delivery channel for Markets products to
international corporate clients. The division also serves international
subsidiaries of clients from other RBS Group divisions (e.g. UK
Corporate, Ulster Bank and US Retail & Commercial) through its
international network.
Ulster Bank is a leading retail and commercial bank in Northern Ireland
and the Republic of Ireland. It provides a comprehensive range of
financial services through both its Retail Banking division, which provides
loan and deposit products through a network of branches and direct
channels, and its Corporate Banking division, which provides services to
businesses and corporate customers.
US Retail & Commercial provides financial services primarily through the
Citizens and Charter One brands. US Retail & Commercial is engaged in
retail and corporate banking activities through its branch network in 12
states in the United States and through non-branch offices in other
states.
In February 2013, the Group announced that it would commence work on
a partial flotation of RBS Citizens and in November 2013 confirmed that a
partial initial public offering is now planned for 2014. The Group intends
to fully divest the business by the end of 2016.
The divisions discussed above are collectively referred to as Retail &
Commercial.
Markets is a leading origination, sales and trading business across debt
finance, fixed income and currencies. The division offers a unified service
to the Group’s corporate and institutional clients. The Markets’
origination, sales and research teams build strong ongoing client
partnerships, provide market perspective and access, and work with the
division’s trading and structuring teams to meet the client’s objectives
across financing, risk management, investment, securitisation and
liquidity.
A new strategy for the Markets division was announced in June 2013
enabling RBS to concentrate on its core customers’ needs where the
Markets business is strongest. Markets is now focused on our core fixed
income capabilities across rates, foreign exchange, asset backed
products, credit and debit capital markets, while de-emphasising some
more capital intensive structured product areas.
Central Functions comprises Group and corporate functions, such as
treasury, finance, risk management, compliance, legal, communications
and human resources. The Centre manages the Group's capital
resources and Group-wide regulatory projects and provides services to
the operating divisions.
Non-Core Division managed separately assets that the Group intended to
run off or dispose of. The division contained a range of businesses and
asset portfolios primarily from the legacy GBM businesses, higher risk
profile asset portfolios including excess risk concentrations, and other
illiquid portfolios. It also included a number of other portfolios and
businesses including regional markets businesses that the Group had
concluded were no longer strategic.