RBS 2013 Annual Report Download - page 95
Download and view the complete annual report
Please find page 95 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
Report of the directors
93
The directors present their report together with the audited accounts for
the year ended 31 December 2013.
Group structure
The company is a holding company owning the entire issued ordinary
share capital of The Royal Bank of Scotland plc, the principal direct
operating subsidiary undertaking of the company. The Group comprises
the company and all its subsidiary and associates, including the Royal
Bank and NatWest. Details of the principal subsidiary undertakings of the
company are shown in Note 8 on page 505.
Following placing and open offers in December 2008 and in April 2009,
HM Treasury (HMT) 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 HMT. 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, HMT’s holding of ordinary shares of the company remained at
70.3%, although its economic interest rose to 84.4%.
At 31 December 2013, HMT’s holding in the company’s ordinary shares
was 63.9% and its economic interest was 80.2%.
Results and dividends
The loss attributable to the ordinary and B shareholders of the company
for the year ended 31 December 2013 amounted to £8,995 million
compared with a loss of £6,055 million for the year ended 31 December
2012, as set out in the consolidated income statement on page 370.
The company did not pay a dividend on ordinary shares in 2012 or 2013.
On 26 November 2009, RBS entered into a State Aid Commitment Deed
with HMT containing commitments and undertakings that were designed
to ensure that HMT was able to comply with the commitments to be given
by it to the European Commission for the purposes of obtaining approval
for the State aid provided to RBS. As part of these commitments and
undertakings, RBS agreed not to pay discretionary coupons and
dividends on its existing hybrid capital instruments for a period of two
years. This period commenced on 30 April 2010 for RBS Group
instruments and ended on 30 April 2012; the two year deferral period for
RBS Holdings N.V. instruments commenced on 1 April 2011 and ended
on 1 April 2013.
The Group has now resumed payments on all discretionary non-equity
capital instruments. Future coupons and dividends on hybrid capital
instruments will only be paid subject to, and in accordance with, the terms
of the relevant instruments.
In the context of prior macro-prudential policy discussions, the Board
decided to partially neutralise any impact on Core Tier 1 capital of coupon
and dividend payments in respect of 2013 Group hybrid capital
instruments through equity issuances of c.£300 million. Consequently
during the year, approximately £255 million was raised through the issue
of new ordinary shares and a further £44 million was raised in connection
with equity funding of employee incentive awards through the sale of
surplus shares held by the Group’s Employee Benefit Trust.
For 2014, the Board has decided to continue partially neutralising the
Core Tier 1 impact of Group hybrid capital instruments. It is expected that
£300 million of new equity will be issued during the course of 2014 to
achieve this aim.
Business review
Activities
The Group is engaged principally in providing a wide range of banking
and other financial services. Further details of the organisational structure
and business overview of the Group, including the products and services
provided by each of its divisions and the competitive markets in which
they operate, are contained in the Business review on pages 104 to 106.
Details of the strategy for delivering the company’s objectives can be
found in the Strategic report.
Risk factors
The Group’s future performance and results could be materially different
from expected results depending on the outcome of certain potential risks
and uncertainties. Certain risk factors the Group faces are summarised in
the Business review on pages 107 and 108. Fuller details of these and
other risk factors are set out on pages 523 to 536.
The reported results of the Group are also sensitive to the accounting
policies, assumptions and estimates that underlie the preparation of its
financial statements. Details of the Group’s critical accounting policies
and key sources of accounting judgments are included in Accounting
policies on pages 386 to 389.
The Group’s approach to risk management, including its financial risk
management objectives and policies and information on the Group’s
exposure to price, credit, liquidity and cash flow risk, is discussed in the
Business review:risk and balance sheet management.
Financial performance
A review of the Group's performance during the year ended 31 December
2013, including details of each division, and the Group's financial position
as at that date is contained in the Business review on pages 109 to 168.
RBS Holdings N.V. (formerly ABN AMRO Holding N.V.)
In 2007, RFS Holdings B.V., which was jointly owned by the Group, the
Dutch State (successor to Fortis) and Santander (together, the
“Consortium Members”) completed the acquisition of ABN AMRO Holding
N.V.
On 1 April 2010, the businesses acquired by the Dutch State were
transferred to ABN AMRO Group N.V., itself owned by the Dutch State. In
connection with the transfer ABN AMRO Holding N.V. was renamed RBS
Holdings N.V. and its banking subsidiary was renamed The Royal Bank
of Scotland N.V. (“RBS N.V.”).
In October 2011, the Group completed the transfer of a substantial part of
the UK activities of RBS N.V. to the Royal Bank. Substantially all of the
Netherlands and EMEA businesses were transferred to the Royal Bank in
September 2012. Russia, Korea and the North American businesses
were transferred to the Royal Bank in 2013. Certain assets of RBS N.V.
continue to be shared by the Consortium Members.