RBS 2014 Annual Report Download - page 130

128
RBS – Interim Results 2015
Summary risk factors
●
A
s a result of the UK Government’s majority shareholding in the Group it is able to exercise a
significant degree of influence over the Group including on dividend policy, the election of directors o
r
appointment of senior management, remuneration policy and/or limiting the Group’s operations. The
offer or sale by the UK Government of all or a portion of its shareholding in the company could affect
the market price of the company’s shares and other securities and acquisitions of ordinary shares by
the UK Government (including through conversions of other securities or further purchases of shares)
may result in the delisting of the company from the Official List.
● The Group is required to make planned contributions to its pension schemes and to compensation
schemes in respect of certain financial institutions (such as the UK Financial Services Compensation
Scheme). Pension contributions may be increased to meet pension deficits or to address additional
funding requirements, including those which may arise in connection with the restructuring of the
Group’s pension plan as a result of the implementation of the ring-fence. The Group may also be
required to make further contributions under resolution financing arrangements applicable to banks
and investment firms. Additional or increased contributions may have an adverse impact on the
Group’s results of operations, cash flow and financial condition.
● The deterioration of the prevailing economic and market conditions and the actual or perceived failure
or worsening credit of the Group’s counterparties or borrowers and depressed asset valuations
resulting from poor market conditions, have adversely affected the Group and could continue to
adversely affect the Group if, due to a deterioration in economic and financial market conditions o
r
continuing weak economic growth, it were to recognise or realise further write-downs or impairment
charges. Changes in interest rates, foreign exchange rates, oil and other commodity prices also
impact the value of the Group’s investment and trading portfolios and may have a material adverse
effect on the Group’s financial performance and business operations.
● The value of certain financial instruments recorded at fair value is determined using financial models
incorporating assumptions, judgements and estimates that may change over time or may ultimatel
y
not turn out to be accurate. The Group’s valuation, capital and stress test models and the parameters
and assumptions on which they are based rely on market data inputs and need to be constantly
updated to ensure their accuracy. Failure of these models to accurately reflect changes in the
environment in which the Group operates or the failure to properly input any such changes could have
an adverse impact on the modeled results.
● Developments in regulatory or tax legislation could have an effect on how the Group conducts its
business and on its results of operations and financial condition, and the recoverability of certain
deferred tax assets recognised by the Group is subject to uncertainty.