6th May 2011 07:01
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. |
Related Shares:
RBS.L