Interim Results - Part 10 of 13

RNS Number : 8172L

Royal Bank of Scotland Group PLC

05 August 2011

 



Appendix 2

Businesses outlined for disposal

Appendix 2 Businesses outlined for disposal

To comply with EC State Aid requirements the Group agreed to make a series of divestments by the end of 2013: the disposal of RBS Insurance, Global Merchant Services and its interest in RBS Sempra Commodities JV. The Group also agreed to dispose of its RBS England and Wales and NatWest Scotland branch-based businesses, along with certain SME and corporate activities across the UK ('UK branch-based businesses'). The disposals of Global Merchant Services and RBS Sempra Commodities JV businesses have now effectively been completed.

The sale of the Group's UK branch-based businesses to Santander UK plc continues to make good progress. Due to the complex nature of the process required to separate the divesting branches and associated assets, and the desire to minimise customer disruption, the transaction is now expected to complete in the second half of 2012, subject to regulatory approvals and other conditions.

Preparations for the disposal of RBS Insurance, by way of public flotation or a trade sale, targeted for the second half of 2012 continue. External advisors were appointed during Q4 2010 and the process of separation is proceeding on plan. In the meantime, the business continues to be managed and reported as a separate core division.

The table below shows Total income and Operating profit of RBS Insurance, and the UK branch-based businesses.

	Total income			Operating profit/(loss) before impairments			Operating profit/(loss)
	H1 2011	FY 2010		H1 2011	FY 2010		H1 2011	FY 2010
	£m	£m		£m	£m		£m	£m
RBS Insurance (1)	2,116	4,369		206	(295)		206	(295)
UK branch-based businesses (2)	472	902		248	439		185	160
Total	2,588	5,271		454	144		391	(135)

The table below shows the estimated risk-weighted assets, total assets and capital of the businesses identified for disposal.

	RWAs			Total assets			Capital
	30 June  2011	31 December  2010		30 June  2011	31 December  2010		30 June  2011	31 December  2010
	£bn	£bn		£bn	£bn		£bn	£bn
RBS Insurance (1)	n/m	n/m		12.7	12.4		4.2	4.0
UK branch-based businesses (2)	11.5	13.2		19.6	19.9		1.0	1.2
Total	11.5	13.2		32.3	32.3		5.2	5.2

Notes:

(1)	As reported in the Interim Results for the half year ended 30 June 2011 and Annual Results for the year ended 31 December 2010 and excluding non-core business. Estimated capital includes approximately £1.0 billion of goodwill.
(2)	Estimated notional equity based on 9% of RWAs.

Appendix 2 Businesses outlined for disposal (continued)

Further information on the UK branch-based businesses by division is shown in the tables below:

	Division			Total
	UK  Retail	UK  Corporate		H1 2011	FY 2010
	£m	£m		£m	£m
Income statement
Net interest income	146	200		346	656
Non-interest income	50	76		126	246
Total income	196	276		472	902
Direct expenses
- staff	(39)	(43)		(82)	(176)
- other	(47)	(35)		(82)	(144)
Indirect expenses	(37)	(23)		(60)	(143)
	(123)	(101)		(224)	(463)
Operating profit before impairment losses	73	175		248	439
Impairment losses (1)	(39)	(24)		(63)	(279)
Operating profit	34	151		185	160
Analysis of income by product
Loans and advances	69	174		243	445
Deposits	53	77		130	261
Mortgages	65	-		65	120
Other	9	25		34	76
Total income	196	276		472	902
Net interest margin	4.61%	3.07%		3.57%	3.24%
Employee numbers (full time equivalents rounded to the   nearest hundred)	3,000	1,600		4,600	4,400

Note:

(1)	Q1 2011 impairment losses benefitted from £54 million of latent and other provision releases.

	Division				Total
	UK  Retail	UK  Corporate	Global  Banking  & Markets		30 June  2011	31 December  2010
	£bn	£bn	£bn		£bn	£bn
Capital and balance sheet
Total third party assets	6.6	13.0	-		19.6	19.9
Loans and advances to customers (gross)	6.9	13.4	-		20.3	20.7
Customer deposits	8.8	14.9	-		23.7	24.0
Derivative assets	-	-	0.4		0.4	n/a
Derivative liabilities	-	-	0.1		0.1	n/a
Risk elements in lending	0.5	1.1	-		1.6	1.7
Loan:deposit ratio	79%	90%	-		86%	86%
Risk-weighted assets	3.3	8.2	-		11.5	13.2

 

END

 

 

IR EADPSEEEFEEF