Interim Management Statement - Part 10 of 10

RNS Number : 0664G

Royal Bank of Scotland Group PLC

06 May 2011

 



Appendix 3

Businesses outlined for disposal

Appendix 3 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 sale 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.

On 4 August 2010, the Group announced its agreement to sell 318 branches and associated assets and liabilities to Santander UK plc for a premium of £350 million to net assets at closing. The consideration will be paid in cash and is subject to certain closing adjustments. The transaction includes 311 Royal Bank of Scotland branches in England and Wales; seven NatWest branches in Scotland; the retail and SME customer accounts attached to these branches; the Direct SME business; and certain mid-corporate businesses. EC/UK merger control and HMRC clearances were received during Q4 2010. The separation and transfer process is underway, and a joint transition plan is being developed.

Preparations for the disposal of RBS Insurance, by way of a trade sale or public flotation targeted for the second half of 2012, continue. External advisors were appointed during Q4 2010 and the process of separation is proceeding on plan. However, 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)
	Q1 2011	FY 2010		Q1 2011	FY 2010		Q1 2011	FY 2010
	£m	£m		£m	£m		£m	£m
RBS Insurance (1)	1,070	4,369		67	(295)		67	(295)
UK branch-based businesses (2)	241	902		128	439		129	160
Total	1,311	5,271		195	144		196	(135)

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

	RWAs			Total assets			Capital
	31 March  2011	31 December  2010		31 March  2011	31 December  2010		31 March  2011	31 December  2010
	£bn	£bn		£bn	£bn		£bn	£bn
RBS Insurance (1)	n/m	n/m		12.5	12.4		4.0	4.0
UK branch-based businesses (2)	11.5	13.2		19.9	19.9		1.0	1.2
Total	11.5	13.2		32.4	32.3		5.0	5.2

Notes:

(1)	As reported in the 2011 Q1 IMS 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)	All data are estimated; notional equity based upon 9% of RWAs.

Appendix 3 Businesses outlined for disposal

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

	Division			Total
	UK  Retail	UK  Corporate		Q1 2011	FY 2010
	£m	£m		£m	£m
Income statement
Net interest income	71	107		178	656
Non-interest income	26	37		63	246
Total income	97	144		241	902
Direct expenses
- staff	(19)	(20)		(39)	(176)
- other	(20)	(19)		(39)	(144)
Indirect expenses	(22)	(13)		(35)	(143)
	(61)	(52)		(113)	(463)
Operating profit before impairment losses	36	92		128	439
Impairment losses (1)	(20)	21		1	(279)
Operating profit	16	113		129	160
Analysis of income by product
Loans & advances	35	96		131	445
Deposits	26	33		59	261
Mortgages	31	-		31	120
Other	5	15		20	76
Total income	97	144		241	902
Net interest margin	4.51%	3.30%		3.69%	3.24%
Employee numbers (full time equivalents rounded to the   nearest hundred)	3,000	1,400		4,400	4,400

	Division				Total
	UK  Retail	UK  Corporate	Global  Banking  & Markets		31 March  2011	31 December  2010
	£bn	£bn	£bn		£bn	£bn
Capital and balance sheet
Total third party assets	6.8	13.9	-		20.7	20.7
Loans and advances to customers (gross)	6.8	13.9	-		20.7	20.7
Customer deposits	8.8	14.7	-		23.5	24.0
Derivative assets	-	-	0.4		0.4	n/a
Derivative liabilities	-	-	0.1		0.1	n/a
Risk elements in lending	0.5	1.2	-		1.7	1.7
Loan:deposit ratio	77%	95%	-		88%	86%
Risk-weighted assets	3.2	8.3	-		11.5	13.2

Note:

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

 

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