RBS 2013 Annual Report Download - page 483
Download and view the complete annual report
Please find page 483 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
Notes on the consolidated accounts
481
In issuing RMBS, Markets generally assigned certain representations and
warranties regarding the characteristics of the underlying loans made by
the originator of the residential mortgages; however, in some
circumstances, Markets made such representations and warranties itself.
Where Markets has given those or other representations and warranties
(whether relating to underlying loans or otherwise), Markets may be
contractually required to repurchase such loans or indemnify certain
parties against losses for certain breaches of such representations and
warranties. In certain instances where it is required to repurchase loans
or related securities, Markets may be able to assert claims against third
parties who provided representations or warranties to Markets when
selling loans to it, although the ability to recover against such parties is
uncertain. Between the start of 2009 and 31 December 2013, Markets
received approximately US$741 million in repurchase demands in
respect of loans made primarily from 2005 to 2008 and related securities
sold where obligations in respect of contractual representations or
warranties were undertaken by Markets. However, repurchase demands
presented to Markets are subject to challenge and rebuttal by Markets.
RBS Citizens Financial Group, Inc (RBS Citizens) has not been an issuer
or underwriter of non-agency RMBS. However, RBS Citizens is an
originator and servicer of residential mortgages, and it routinely sells such
mortgage loans in the secondary market and to GSEs. In the context of
such sales, RBS Citizens makes certain representations and warranties
regarding the characteristics of the underlying loans and, as a result, may
be contractually required to repurchase such loans or indemnify certain
parties against losses for certain breaches of the representations and
warranties concerning the underlying loans. Between the start of 2009
and 31 December 2013, RBS Citizens received US$208 million in
repurchase demands in respect of loans originated primarily since 2003.
However, repurchase demands presented to RBS Citizens are subject to
challenge and rebuttal by RBS Citizens.
Although there has in recent times been disruption in the ability of certain
financial institutions operating in the United States to complete
foreclosure proceedings in respect of US mortgage loans in a timely
manner or at all (including as a result of interventions by certain states
and local governments), to date, RBS Citizens has not been materially
impacted by such disruptions and the Group has not ceased making
foreclosures.
The Group cannot currently estimate what the ultimate exposure may be
with respect to repurchase demands. Furthermore, the Group is unable to
estimate the extent to which the matters described above will impact it,
and future developments may have an adverse impact on the Group’s net
assets, operating results or cash flows in any particular period.
RBS Citizens consent orders
The activities of RBS Citizens' two US bank subsidiaries - RBS Citizens,
N.A. and Citizens Bank of Pennsylvania - are subject to extensive US
laws and regulations concerning unfair or deceptive acts or practices in
connection with customer products. Certain of the bank subsidiaries’
practices with respect to overdraft protection and other consumer
products have not met applicable standards. The bank subsidiaries have
implemented and are continuing to implement changes to bring their
practices in conformity with applicable laws and regulations. In April
2013, the bank subsidiaries consented to the issuance of orders by their
respective primary federal banking regulators, the Office of the
Comptroller of the Currency (OCC) and the Federal Deposit Insurance
Corporation (FDIC) (the Consent Orders). In the Consent Orders (which
are publicly available and will remain in effect until terminated by the
regulators), the bank subsidiaries neither admitted nor denied the
regulators’ findings that they had engaged in deceptive marketing and
implementation of the bank's overdraft protection programme, checking
rewards programmes, and stop-payment process for pre-authorised
recurring electronic fund transfers.
The Consent Orders require the bank subsidiaries to pay a total of US$10
million in civil monetary penalties, to develop plans to provide restitution
to affected customers (the amount of which is anticipated to be
approximately US$8 million), to cease and desist any operations in
violation of Section 5 of the Federal Trade Commission Act, and to
submit to the regulators periodic written progress reports regarding
compliance with the Consent Orders.
In addition, RBS Citizens, N.A. agreed to take certain remedial actions to
improve its compliance risk management systems and to create a
comprehensive action plan designed to achieve compliance with the
Consent Order. Restitution plans have been prepared and submitted for
approval, and RBS Citizens, N.A. has submitted for approval and is in the
process of implementing its action plan for compliance with the Consent
Order, as well as updated policies, procedures and programmes related
to its compliance risk management systems. In addition to the above, the
bank subsidiaries could face further formal administrative enforcement
actions from their federal supervisory agencies, including the assessment
of civil monetary penalties and restitution, relating to issues arising from
other consumer products.
Governance and risk management consent order
On 27 July 2011, the Group agreed with the Board of Governors of the
Federal Reserve System, the New York State Banking Department, the
Connecticut Department of Banking, and the Illinois Department of
Financial and Professional Regulation to enter into a consent Cease and
Desist Order (the Order) to address deficiencies related to governance,
risk management and compliance systems and controls in RBS plc and
RBS N.V. branches. In the Order, the Group agreed to create the
following written plans or programmes:
• a plan to strengthen board and senior management oversight of the
corporate governance, management, risk management, and
operations of the Group’s U.S. operations on an enterprise-wide and
business line basis,
• an enterprise-wide risk management programme for the Group’s
U.S. operations,