RBS 2013 Annual Report Download - page 391
Download and view the complete annual report
Please find page 391 of the 2013 RBS annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
1
-
2
-
3
-
4
-
5
-
6
-
7
-
8
-
9
-
10
-
11
-
12
-
13
-
14
-
15
-
16
-
17
-
18
-
19
-
20
-
21
-
22
-
23
-
24
-
25
-
26
-
27
-
28
-
29
-
30
-
31
-
32
-
33
-
34
-
35
-
36
-
37
-
38
-
39
-
40
-
41
-
42
-
43
-
44
-
45
-
46
-
47
-
48
-
49
-
50
-
51
-
52
-
53
-
54
-
55
-
56
-
57
-
58
-
59
-
60
-
61
-
62
-
63
-
64
-
65
-
66
-
67
-
68
-
69
-
70
-
71
-
72
-
73
-
74
-
75
-
76
-
77
-
78
-
79
-
80
-
81
-
82
-
83
-
84
-
85
-
86
-
87
-
88
-
89
-
90
-
91
-
92
-
93
-
94
-
95
-
96
-
97
-
98
-
99
-
100
-
101
-
102
-
103
-
104
-
105
-
106
-
107
-
108
-
109
-
110
-
111
-
112
-
113
-
114
-
115
-
116
-
117
-
118
-
119
-
120
-
121
-
122
-
123
-
124
-
125
-
126
-
127
-
128
-
129
-
130
-
131
-
132
-
133
-
134
-
135
-
136
-
137
-
138
-
139
-
140
-
141
-
142
-
143
-
144
-
145
-
146
-
147
-
148
-
149
-
150
-
151
-
152
-
153
-
154
-
155
-
156
-
157
-
158
-
159
-
160
-
161
-
162
-
163
-
164
-
165
-
166
-
167
-
168
-
169
-
170
-
171
-
172
-
173
-
174
-
175
-
176
-
177
-
178
-
179
-
180
-
181
-
182
-
183
-
184
-
185
-
186
-
187
-
188
-
189
-
190
-
191
-
192
-
193
-
194
-
195
-
196
-
197
-
198
-
199
-
200
-
201
-
202
-
203
-
204
-
205
-
206
-
207
-
208
-
209
-
210
-
211
-
212
-
213
-
214
-
215
-
216
-
217
-
218
-
219
-
220
-
221
-
222
-
223
-
224
-
225
-
226
-
227
-
228
-
229
-
230
-
231
-
232
-
233
-
234
-
235
-
236
-
237
-
238
-
239
-
240
-
241
-
242
-
243
-
244
-
245
-
246
-
247
-
248
-
249
-
250
-
251
-
252
-
253
-
254
-
255
-
256
-
257
-
258
-
259
-
260
-
261
-
262
-
263
-
264
-
265
-
266
-
267
-
268
-
269
-
270
-
271
-
272
-
273
-
274
-
275
-
276
-
277
-
278
-
279
-
280
-
281
-
282
-
283
-
284
-
285
-
286
-
287
-
288
-
289
-
290
-
291
-
292
-
293
-
294
-
295
-
296
-
297
-
298
-
299
-
300
-
301
-
302
-
303
-
304
-
305
-
306
-
307
-
308
-
309
-
310
-
311
-
312
-
313
-
314
-
315
-
316
-
317
-
318
-
319
-
320
-
321
-
322
-
323
-
324
-
325
-
326
-
327
-
328
-
329
-
330
-
331
-
332
-
333
-
334
-
335
-
336
-
337
-
338
-
339
-
340
-
341
-
342
-
343
-
344
-
345
-
346
-
347
-
348
-
349
-
350
-
351
-
352
-
353
-
354
-
355
-
356
-
357
-
358
-
359
-
360
-
361
-
362
-
363
-
364
-
365
-
366
-
367
-
368
-
369
-
370
-
371
-
372
-
373
-
374
-
375
-
376
-
377
-
378
-
379
-
380
-
381
-
382
-
383
-
384
-
385
-
386
-
387
-
388
-
389
-
390
-
391
-
392
-
393
-
394
-
395
-
396
-
397
-
398
-
399
-
400
-
401
-
402
-
403
-
404
-
405
-
406
-
407
-
408
-
409
-
410
-
411
-
412
-
413
-
414
-
415
-
416
-
417
-
418
-
419
-
420
-
421
-
422
-
423
-
424
-
425
-
426
-
427
-
428
-
429
-
430
-
431
-
432
-
433
-
434
-
435
-
436
-
437
-
438
-
439
-
440
-
441
-
442
-
443
-
444
-
445
-
446
-
447
-
448
-
449
-
450
-
451
-
452
-
453
-
454
-
455
-
456
-
457
-
458
-
459
-
460
-
461
-
462
-
463
-
464
-
465
-
466
-
467
-
468
-
469
-
470
-
471
-
472
-
473
-
474
-
475
-
476
-
477
-
478
-
479
-
480
-
481
-
482
-
483
-
484
-
485
-
486
-
487
-
488
-
489
-
490
-
491
-
492
-
493
-
494
-
495
-
496
-
497
-
498
-
499
-
500
-
501
-
502
-
503
-
504
-
505
-
506
-
507
-
508
-
509
-
510
-
511
-
512
-
513
-
514
-
515
-
516
-
517
-
518
-
519
-
520
-
521
-
522
-
523
-
524
-
525
-
526
-
527
-
528
-
529
-
530
-
531
-
532
-
533
-
534
-
535
-
536
-
537
-
538
-
539
-
540
-
541
-
542
-
543
-
544
-
545
-
546
-
547
-
548
-
549
-
550
-
551
-
552
-
553
-
554
-
555
-
556
-
557
-
558
-
559
-
560
-
561
-
562
-
563
-
564
Accounting policies
389
Financial instruments measured at fair value include:
Loans and advances (held-for-trading and designated as at fair value
though profit or loss) - principally comprise reverse repurchase
agreements (reverse repos) and cash collateral.
Debt securities (held-for-trading, designated as at fair value though profit
or loss and available-for-sale) - debt securities include those issued by
governments, municipal bodies, mortgage agencies and financial
institutions as well as corporate bonds, debentures and residual interests
in securitisations.
Equity securities (held-for-trading, designated as at fair value though
profit or loss and available-for-sale) - comprise equity shares of
companies or corporations both listed and unlisted.
Deposits by banks and customer accounts (held-for-trading and
designated as at fair value though profit or loss) - deposits measured at
fair value principally include repurchase agreements (repos) and cash
collateral.
Debt securities in issue (held-for-trading and designated as at fair value
though profit or loss) - principally comprise medium term notes.
Short positions (held-for-trading) - arise in dealing and market making
activities where debt securities and equity shares are sold which the
Group does not currently possess.
Derivatives - these include swaps (currency swaps, interest rate swaps,
credit default swaps, total return swaps and equity and equity index
swaps), forward foreign exchange contracts, forward rate agreements,
futures (currency, interest rate and equity) and options (exchange-traded
options on currencies, interest rates and equities and equity indices and
OTC currency and equity options, interest rate caps and floors and
swaptions).
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. A fair value measurement takes into account the
characteristics of the asset or liability if market participants would take
those characteristics into account when pricing the asset or liability at the
measurement date. It also uses the assumptions that market participants
would use when pricing the asset or liability. In determining fair value the
Group maximises the use of relevant observable inputs and minimises
the use of unobservable inputs.
Where the Group manages a group of financial assets and financial
liabilities on the basis of its net exposure to either market risks or credit
risk, it measures the fair value of a group of financial assets and financial
liabilities on the basis of the price that it would receive to sell a net long
position (i.e. an asset) for a particular risk exposure or to transfer a net
short position (i.e. a liability) for a particular risk exposure in an orderly
transaction at the measurement date under current market conditions.
Credit valuation adjustments are made when valuing derivative financial
assets to incorporate counterparty credit risk. Adjustments are also made
when valuing financial liabilities measured at fair value to reflect the
Group’s own credit standing.
Where the market for a financial instrument is not active, fair value is
established using a valuation technique. These valuation techniques
involve a degree of estimation, the extent of which depends on the
instrument’s complexity and the availability of market-based data. More
details about the Group’s valuation methodologies and the sensitivity to
reasonably possible alternative assumptions of the fair value of financial
instruments valued using techniques where at least one significant input
is unobservable are given in Note 11 on pages 412 to 432.
Accounting developments
International Financial Reporting Standards
A number of IFRSs and amendments to IFRS were in issue at 31
December 2013 that had effective dates of 1 January 2014 or later.
Effective for 2014
‘Offsetting Financial Assets and Financial Liabilities (Amendments to IAS
32)’ adds application guidance to IAS 32 to address inconsistencies
identified in applying some of the standard’s criteria for offsetting financial
assets and financial liabilities.
‘Investment Entities (amendments to IFRS 10, IFRS 12 and IAS 27)’
applies to investment entities; such entities should measure their
subsidiaries (other than those that provide services related to the entity’s
investment activities) at fair value through profit or loss.
IFRIC 21 ‘Levies’ provides guidance on accounting for levies payable to
public authorities if certain conditions are met on a particular date.
IAS 36 ‘Recoverable Amount Disclosures for Non-Financial Assets
(Amendments to IAS 36)’ align IAS 36’s disclosure requirements about
recoverable amounts with IASB’s original intentions.
IAS 39 ‘Novation of Derivatives and Continuation of Hedge Accounting
(Amendments to IAS 39)’ provides relief from discontinuing hedge
accounting when novation of a derivative designated as a hedging
instrument meets certain criteria.
The implementation of these requirements is not expected to have a
material effect on the Group’s financial statements.