RBS 2013 Annual Report Download - page 6

04
Delivering our capital plan
To deliver our capital plan RBS has formed
the Capital Resolution Group (CRG), which is
made up of four pillars: exiting the assets in
RCR, delivering the IPOs for both Citizens and
Williams & Glyn, and optimising the bank’s
group-wide shipping business.
RCR was set up from 1 January 2014 and will
manage a pool of £29 billion of assets with
particularly high capital intensity or potentially
volatile outcomes in stressed environments,
aiming to accelerate run-down of these
exposures to free up capital for the bank. The
revised strategy to run down high risk loans
faster led to an increased impairment charge.
When originally announced, RCR assets were
projected to be £38 billion at the end of 2013,
but accelerated disposals and increased
impairments have reduced this total to £29
billion. Further details about RCR are set out
on page 160.
During the course of 2013 RBS sold two
tranches of its remaining shares in Direct Line
Insurance Group, realising gross proceeds of
£1,137 million. At 31 December 2013, RBS held
28.5% of Direct Line Insurance Group. On 26
February 2014, RBS announced that it had
entered into a placing agreement to complete
the sale of its residual interest (except for
4.2 million shares held to satisfy long term
incentive plan awards granted by RBS to
Direct Line Group management). Accordingly,
on settlement of the placing, the Group will
have completed the disposal as required by
the European Commission.
On 27 November 2013, RBS announced the
sale of its remaining economic interest in the
WorldPay global payments business. A gain on
sale of £159 million was recognised in Q4 2013.
On 1 November 2013, RBS announced plans
to accelerate the divestment of Citizens, its US
banking subsidiary. Preparations for a partial
initial public offering (IPO) in 2014 remain on
track, and the bank intends to fully divest the
business by the end of 2016.
Following the conclusion of a £600 million pre-
IPO investment by a consortium of investors
led by global financial services specialists
Corsair Capital and Centerbridge Partners,
and including the Church Commissioners for
England and RIT Capital Partners plc, the
Williams & Glyn business (formerly known as
“Project Rainbow”) has made good progress
towards its IPO.
Discussions with the UK Government over
the retirement of the Dividend Access Share
(DAS) are well advanced. A successful
restructuring of the DAS will represent a
significant step towards the normalisation of
RBS’s capital structure.
On 16 December 2013, RBS cancelled its
£8 billion Contingent Capital Facility with
HM Treasury.
Legacy conduct issues
As announced in a trading update on 27
January 2014, RBS has provided £1,910
million in Q4 2013 covering claims and
conduct-related matters primarily relating
to mortgage-backed and other securities
litigation. Regulatory and litigation provisions
for the full year amounted to £2,394 million.
An additional £465 million provision for
Payment Protection Insurance (PPI) redress
and related costs was booked in Q4 2013,
making a total of £900 million for the full year