REG - Royal Bk Scot.Grp. - Final Results <Origin Href="QuoteRef">RBS.L</Origin> - Part 5
26/02/2016 07:12
- Part 5: For the preceding part double click ID:nRSZ2357Qd
the period (1,185) (2,711) (2,599) 1,082 (5,605)
Items that do not qualify for reclassification
(Loss)/gain on remeasurement of retirement benefit schemes (73) (1,857) (93) 3 (186)
Tax 306 314 310 (1) (20)
233 (1,543) 217 2 (206)
Items that do qualify for reclassification
Available-for-sale financial assets 44 807 139 (50) 199
Cash flow hedges (700) 1,413 (398) 408 958
Currency translation (1,181) 307 (4) (604) 424
Tax 108 (455) 2 (38) (264)
(1,729) 2,072 (261) (284) 1,317
Other comprehensive (loss)/income after tax (1,496) 529 (44) (282) 1,111
Total comprehensive (loss)/income for the period (2,681) (2,182) (2,643) 800 (4,494)
Total comprehensive (loss)/income is attributable to:
Non-controlling interests 370 246 13 58 204
Preference shareholders 297 330 74 80 99
Paid-in equity holders 88 49 47 17 16
Dividend access share - 320 - - -
Ordinary shareholders (3,436) (3,127) (2,777) 645 (4,813)
(2,681) (2,182) (2,643) 800 (4,494)
* Restated, refer to Note 1 on page 46 for further details.
Key points
● The loss on remeasurement of retirement benefit schemes reflects the change of accounting policy for pensions. For further details, refer to Note 1 on page 46.
● Cash flow hedging losses in both the year and quarter principally result from transfers from equity as hedged transactions occurred. In the year, this is partially offset by cash flow hedging gains deferred in equity.
● Currency translation losses for the year predominantly relates to the recycling of foreign exchange reserves upon ceding control of Citizens and the strengthening of sterling against the euro, partially offset by the weakening of sterling against the US dollar.
● The movement in available-for-sale financial assets in both the year and quarter reflects significant unrealised gains on a holding of euro equity securities. In the year, this is partially offset by unrealised losses on available-for-sale debt securities.
Statutory results
Consolidated balance sheet as at 31 December 2015
31 December 30 September 31 December
2015 2015* 2014*
£m £m £m
Assets
Cash and balances at central banks 79,404 77,220 74,872
Net loans and advances to banks 18,361 22,681 23,027
Reverse repurchase agreements and stock borrowing 12,285 15,255 20,708
Loans and advances to banks 30,646 37,936 43,735
Net loans and advances to customers 306,334 311,383 334,251
Reverse repurchase agreements and stock borrowing 27,558 36,545 43,987
Loans and advances to customers 333,892 347,928 378,238
Debt securities 82,097 81,307 86,649
Equity shares 1,361 2,199 5,635
Settlement balances 4,116 9,397 4,667
Derivatives 262,514 296,019 353,590
Intangible assets 6,537 7,151 7,781
Property, plant and equipment 4,482 4,607 6,167
Deferred tax 2,631 1,811 1,911
Prepayments, accrued income and other assets 4,242 4,809 5,763
Assets of disposal groups 3,486 6,300 82,011
Total assets 815,408 876,684 1,051,019
Liabilities
Bank deposits 28,030 30,543 35,806
Repurchase agreements and stock lending 10,266 12,800 24,859
Deposits by banks 38,296 43,343 60,665
Customer deposits 343,186 346,267 354,288
Repurchase agreements and stock lending 27,112 30,555 37,351
Customer accounts 370,298 376,822 391,639
Debt securities in issue 31,150 37,360 50,280
Settlement balances 3,390 8,401 4,503
Short positions 20,809 20,108 23,029
Derivatives 254,705 288,905 349,805
Accruals, deferred income and other liabilities 15,115 14,324 13,346
Retirement benefit liabilities 3,789 3,718 4,318
Deferred tax 882 376 500
Subordinated liabilities 19,847 20,184 22,905
Liabilities of disposal groups 2,980 6,401 71,320
Total liabilities 761,261 819,942 992,310
Equity
Non-controlling interests 716 703 2,946
Owners' equity
Called up share capital 11,625 6,984 6,877
Reserves 41,806 49,055 48,886
Total equity 54,147 56,742 58,709
Total liabilities and equity 815,408 876,684 1,051,019
Owners' equity attributable to:
Ordinary shareholders 47,480 50,088 50,666
Other equity owners 5,951 5,951 5,097
53,431 56,039 55,763
*Restated, refer to Note 1 on page 46 for further details.
The parent company's distributable reserves at 31 December 2015 were £16.3 billion (31 December 2014 - £17.5 billion).
Statutory results
Consolidated statement of changes in equity for the period ended 31 December 2015
Year ended Quarter ended
31 December 31 December 31 December 30 September 31 December
2015 2014* 2015 2015* 2014*
£m £m £m £m £m
Called-up share capital
At beginning of period 6,877 6,714 6,984 6,981 6,832
Ordinary shares issued 159 163 51 4 45
Conversion of B shares (1) 4,590 - 4,590 - -
Preference shares redeemed (2) (1) - - (1) -
At end of period 11,625 6,877 11,625 6,984 6,877
Paid-in equity
At beginning of period 784 979 2,646 634 979
Redeemed/reclassified (150) (195) - - (195)
Additional Tier 1 capital notes issued 2,012 - - 2,012 -
At end of period 2,646 784 2,646 2,646 784
Share premium account
At beginning of period 25,052 24,667 25,315 25,306 24,934
Ordinary shares issued 373 385 110 9 118
At end of period 25,425 25,052 25,425 25,315 25,052
Merger reserve
At beginning of period 13,222 13,222 13,222 13,222 13,222
Transfer to retained earnings (2,341) - (2,341) - -
At end of period 10,881 13,222 10,881 13,222 13,222
Available-for-sale reserve
At beginning of period 299 (308) 210 244 172
Unrealised gains 31 980 139 6 173
Realised losses/(gains) 27 (333) 2 (38) (19)
Tax (16) (67) (44) (11) (27)
Recycled to profit or loss on disposal of businesses (3) - 36 - - -
Recycled to profit or loss on ceding control of Citizens (4) 9 - - 9 -
Transfer to retained earnings (43) (9) - - -
At end of period 307 299 307 210 299
Cash flow hedging reserve
At beginning of period 1,029 (84) 810 435 291
Amount recognised in equity 712 2,871 (65) 803 1,328
Amount transferred from equity to earnings (1,354) (1,458) (333) (316) (370)
Tax 98 (334) 46 (76) (220)
Recycled to profit or loss on ceding control of Citizens (5) (36) - - (36) -
Transfer to retained earnings 9 34 - - -
At end of period 458 1,029 458 810 1,029
Foreign exchange reserve
At beginning of period 3,483 3,691 1,679 2,317 3,173
Retranslation of net assets (22) 113 17 509 209
Foreign currency (losses)/gains on hedges of net assets (176) 108 (26) (188) 114
Tax (11) (30) - 3 (4)
Recycled to profit or loss on disposal of businesses 4 - 4 - -
Recycled to profit or loss on ceding control of Citizens (962) - - (962) -
Transfer to retained earnings (642) (399) - - (9)
At end of period 1,674 3,483 1,674 1,679 3,483
Capital redemption reserve
At beginning of period 9,131 9,131 9,132 9,131 9,131
Conversion of B shares (1) (4,590) - (4,590) - -
Preference shares redeemed (2) 1 - - 1 -
At end of period 4,542 9,131 4,542 9,132 9,131
*Restated, refer to Note 1 on page 46 for further details.
Notes:
(1) In October 2015, all B shares were converted into ordinary shares of £1 each.
(2) Non-cumulative dollar preference shares totalling $1.9 billion were redeemed in September 2015.
(3) Net of tax - £11 million charge in year ended December 2014.
(4) Net of tax - £6 million charge.
(5) Net of tax - £16 million credit.
(6) See Basis of preparation in Note 1.
(7) Includes £2,491 million relating to the secondary offering of Citizens in March 2015 (2014 - £2,117 million relating to IPO of Citizens).
Statutory results
Consolidated statement of changes in equity for the period ended 31 December 2015
Year ended Quarter ended
31 December 31 December 31 December 30 September 31 December
2015 2014* 2015 2015* 2014*
£m £m £m £m £m
Retained earnings
At beginning of period (4,001) 783 (3,851) (3,593) 2,072
(Loss)/profit attributable to ordinary shareholders
and other equity owners
- continuing operations (2,801) 756 (2,709) (16) (1,741)
- discontinued operations 1,207 (3,527) 90 1,053 (3,935)
Equity preference dividends paid (297) (330) (74) (80) (99)
Paid-in equity dividends paid, net of tax (88) (49) (47) (17) (16)
Dividend access share dividend - (320) - - -
Transfer from available-for-sale reserve 43 9 - - -
Transfer from cash flow hedging reserve (9) (34) - - -
Transfer from foreign exchange reserve 642 399 - - 9
Transfer from merger reserve 2,341 - 2,341 - -
Costs of placing Citizens equity (29) (45) - - -
Redemption of equity preference shares (2) (1,214) - - (1,214) -
(Loss)/gain on remeasurement of
retirement benefit schemes (6)
- gross (67) (1,857) (87) 3 (186)
- tax 306 314 310 (1) (20)
Loss on disposal of own shares held - (8) - - (8)
Shares issued under employee share schemes (58) (91) (1) - (50)
Share-based payments - - - - -
- gross 36 29 12 14 3
- tax (4) 3 (4) - 3
Reclassification of paid-in equity (27) (33) - - (33)
At end of period (4,020) (4,001) (4,020) (3,851) (4,001)
Own shares held
At beginning of period (113) (137) (108) (108) (136)
Disposal of own shares 6 1 1 - -
Shares issued under employee share schemes - 23 - - 23
At end of period (107) (113) (107) (108) (113)
Owners' equity at end of period 53,431 55,763 53,431 56,039 55,763
*Restated, refer to Note 1 of page 46 for further details.
For notes to this table refer to page 42.
Statutory results
Consolidated statement of changes in equity for the period ended 31 December 2015
Year ended Quarter ended
31 December 31 December 31 December 30 September 31 December
2015 2014* 2015 2015* 2014*
Non-controlling interests
At beginning of period 2,946 473 703 5,705 2,747
Currency translation adjustments and other movements 3 86 1 65 101
Profit/(loss) attributable to non-controlling interests
- continuing operations 75 (22) 20 5 18
- discontinued operations 334 82 - 40 53
Dividends paid (31) (4) - - (4)
Movements in available-for-sale securities
- unrealised gains/(losses) 22 36 (2) 12 42
- realised (gains)/losses (6) 77 - - 3
- tax (5) (13) - - (13)
Movements in cash flow hedging reserve
- amount recognised in equity 32 18 - 11 18
- tax (4) - - - -
- amounts transferred from equity to earnings - (18) - - (18)
Actuarial losses recognised in retirement benefit schemes
- gross (6) - (6) - -
Equity raised (7) 2,537 2,232 - 46 -
Equity withdrawn and disposals (24) (1) - (24) (1)
Loss of control of Citizens (5,157) - - (5,157) -
At end of period 716 2,946 716 703 2,946
Total equity at end of period 54,147 58,709 54,147 56,742 58,709
Total equity is attributable to:
Non-controlling interests 716 2,946 716 703 2,946
Preference shareholders 3,305 4,313 3,305 3,305 4,313
Paid-in equity holders 2,646 784 2,646 2,646 784
Ordinary shareholders 47,480 50,666 47,480 50,088 50,666
54,147 58,709 54,147 56,742 58,709
*Restated, refer to Note 1 on page 46 for further details.
For the notes to this table refer to page 42.
Statutory results
Consolidated cash flow statement for the period ended 31 December 2015
Year ended
31 December 31 December
2015 2014*
£m £m
Operating activities
Operating (loss)/profit before tax on continuing operations (2,703) 2,643
Operating profit/(loss) before tax on discontinued operations 1,766 (3,207)
Adjustments for non-cash items (6,661) (1,149)
Net cash outflow from trading activities (7,598) (1,713)
Changes in operating assets and liabilities 8,589 (18,260)
Net cash flows from operating activities before tax 991 (19,973)
Income taxes paid (73) (414)
Net cash flows from operating activities 918 (20,387)
Net cash flows from investing activities (4,866) 6,609
Net cash flows from financing activities (940) (404)
Effects of exchange rate changes on cash and cash equivalents 576 909
Net decrease in cash and cash equivalents (4,312) (13,273)
Cash and cash equivalents at beginning of year 107,904 121,177
Cash and cash equivalents at end of year 103,592 107,904
*Restated, refer to Note 1 on page 46 for further details.
Notes
1. Basis of preparation
The condensed consolidated financial statements should be read in conjunction with RBS's 2015 Annual Report and Accounts
which were prepared in accordance with International Financial Reporting Standards issued by the International Accounting
Standards Board (IASB) and interpretations issued by the IFRS Interpretations Committee of the IASB as adopted by the
European Union (EU) (together IFRS).
Accounting policies
RBS's principal accounting policies are set out on pages 267 to 276 of the 2015 Annual Report and Accounts. Amendments to
IFRSs effective for 2015 have not had a material effect on RBS's 2015 results.
Pensions
In the fourth quarter of 2015, the Group changed its accounting policy for the recognition of surpluses in its defined
benefit pension schemes: in particular, the policy for determining whether or not it has an unconditional right to a refund
of surpluses in its employee pension funds. Where the Group has a right to a refund, this is not deemed unconditional if
pension fund trustees can enhance benefits for plan members. The amended policy has been applied retrospectively and prior
periods restated.
Critical accounting policies and key sources of estimation uncertainty
The judgements and assumptions that are considered to be the most important to the portrayal of RBS's financial condition
are those relating to pensions, goodwill, provisions for liabilities, deferred tax, loan impairment provisions and fair
value of financial instruments. These critical accounting policies and judgements are described on pages 276 to 279 of
RBS's 2015 Annual Report and Accounts.
Going concern
Having reviewed RBS's forecasts, projections and other relevant evidence, the directors have a reasonable expectation that
RBS will continue in operational existence for the foreseeable future. Accordingly, the results for the period ended 31
December 2015 have been prepared on a going concern basis.
2. Citizens Financial Group
On 3 August 2015, RBS's shareholding in Citizens fell to 20.9% and RBS ceased to consolidate it for accounting purposes
recording a gain (in discontinued operations) of £1.1 billion. On 30 October 2015, RBS sold all of its remaining
shareholding in Citizens. Citizens was classified as a disposal group on 31 December 2014; it was also reclassified as a
discontinued operation and comparatives re-presented accordingly.
Notes
3. Provisions for liabilities and charges
Regulatory and legal actions
Other FX Other
customer investigations/ regulatory Property
PPI IRHP redress (1) litigation provisions Litigation and other Total
£m £m £m £m £m £m £m £m
At 1 January 2015 799 424 580 320 183 1,805 663 4,774
Transfer - - - (15) (50) 65 - -
Currency translation and other movements - - - 8 2 57 140 207
Charge to income statement (2) 100 81 292 334 27 642 901 2,377
Releases to income statement (2) - (12) (18) - - (11) (215) (256)
Provisions utilised (286) (296) (216) (178) (1) (152) (312) (1,441)
At 30 September 2015 613 197 638 469 161 2,406 1,177 5,661
Transfer - - - - (31) 31 - -
Currency translation and other movements - - - 8 (1) 48 (34) 21
Charge to income statement (2) 500 - 127 - - 1,537 523 2,687
Releases to income statement (2) (1) (1) (16) - (7) (15) (202) (242)
Provisions utilised (116) (47) (77) (171) (81) (63) (206) (761)
At 31 December 2015 996 149 672 306 41 3,944 1,258 7,366
Notes:
(1) Closing provision primarily relates to investment advice and packaged accounts.
(2) Relates to continuing operations.
Payment Protection Insurance (PPI)
A charge for PPI of £500 million has been recognised in Q4 2015 as a result of the developments detailed in Note 4,
bringing the charge for the year to £600 million. The cumulative charge in respect of PPI is £4.3 billion, of which £3.3
billion (77%) in redress and expenses had been utilised by 31 December 2015. Of the £4.3 billion cumulative charge, £3.9
billion relates to redress and £0.4 billion to administrative expenses.
The table below shows the sensitivity of the provision to changes in the principal assumptions (all other assumptions
remaining the same).
Sensitivity
Actual to date Current assumption Change in assumption Consequential change in provision
Assumption % £m
Single premium book past business review take-up rate 55% 56% +/-5 +/-55
Uphold rate (1) 91% 89% +/-5 +/-35
Average redress £1,677 £1,638 +/-5 +/-36
Note:
(1) Uphold rate excludes claims where no PPI policy was held.
Interest payable on successful complaints has been included in the provision as has the estimated cost of administration.
There are uncertainties as to the eventual cost of redress which will depend on actual complaint volumes, take-up and
uphold rates and average redress costs. Assumptions relating to these are inherently uncertain and the ultimate financial
impact may be different from the amount provided. We continue to monitor the position closely and refresh the underlying
assumptions. Background information in relation to PPI claims is given in Note 4.
Notes
3. Provisions for liabilities and charges (continued)
Interest Rate Hedging Products (IRHP) redress and related costs
Following an industry-wide review conducted in conjunction with the Financial Services Authority (now being dealt with by
the Financial Conduct Authority (FCA)), RBS agreed to provide redress to customers in relation to certain interest rate
hedging products sold to small and medium-sized businesses classified as retail clients under FSA rules. A net charge of
£68 million for 2015 principally reflects a marginal increase in our redress experience compared to expectations and the
cost of a small number of consequential loss claims over and above interest offered as part of basic redress. We have now
agreed outcomes with the independent reviewer on all cases. A cumulative charge of £1.5 billion has been recognised of
which £1.1 billion relates to redress and £0.4 billion relates to administrative expenses. We continue to monitor the level
of provision given the remaining uncertainties over the eventual cost of redress, including the cost of consequential loss
claims.
Regulatory and legal actions
RBS is party to certain legal proceedings and regulatory and governmental investigations and continues to co-operate with a
number of regulators. All such matters are periodically reassessed with the assistance of external professional advisers,
where appropriate, to determine the likelihood of RBS incurring a liability and to evaluate the extent to which a reliable
estimate of any liability can be made. Additional charges of £2.9 billion in the year ended 31 December 2015 include actual
and anticipated costs following investigations into the foreign exchange market (£334 million), provisions in respect of
mortgage-backed securities related litigation (£2.1 billion), provisions relating to packaged accounts (£157 million) and
other conduct provisions (£377 million).
4. Litigation, investigations and reviews
RBS and certain members of the Group are party to legal proceedings and the subject of investigation and other regulatory
and governmental action ("Matters") in the United Kingdom (UK), the United States (US), the European Union (EU) and other
jurisdictions. Note 30 of RBS's 2015 Annual Report & Accounts, issued on 26 February 2016 and available at
www.rbs.com/results ("Note 30"), discusses the Matters in which RBS is currently involved and developments to those
matters. Other than the Matters discussed in Note 30, no member of the Group is or has been involved in governmental,
legal, or regulatory proceedings (including those which are pending or threatened) that are expected to be material,
individually or in aggregate. Recent developments in the Matters identified in Note 30 which have occurred since the Q3
2015 results were issued on 30 October 2015, include, but are not limited to, those set out below.
Litigation
Other securitisation and securities related litigation in the US
Outstanding MBS litigation is described in Note 30 of RBS's 2015 Annual Report & Accounts. RBS has £3.8 billion in
cumulative provisions relating to that litigation, including £1.5 billion added in the fourth quarter of 2015. Additional
settlement costs or provisions related to the MBS litigation, as well as the ongoing civil and criminal investigations into
MBS-related conduct involving RBS set out under 'Investigations and reviews' in Note 30 (for which no provisions have been
made), may be necessary in future periods for amounts that could be substantial in some instances and in aggregate could be
substantially in excess of the £3.8 billion in existing provisions.
RBS has settled the previously-disclosed MBS lawsuits filed by the Federal Home Loan Bank of San Francisco and the
Commonwealth of Virginia on behalf of the Virginia Retirement System for amounts that have now been provided for or paid to
the plaintiffs.
Notes
4. Litigation, investigations and reviews (continued)
ISDAFIX antitrust litigation
Beginning in September 2014, RBS plc and a number of other financial institutions were named as defendants in several
purported class actions (now consolidated into one complaint) pending in the United States District Court for the Southern
District of New York) alleging manipulation of USD ISDAFIX rates. RBS has reached an agreement to settle this matter,
subject to final settlement documentation and court approval. The settlement amount is covered by an existing provision.
Interest rate swaps antitrust litigation
On 25 November 2015, RBS plc and other members of the Group, as well as a number of other interest rate swap dealers, were
named as defendants in a class action antitrust complaint filed in the United States District Court for the Southern
District of New York. A similar complaint was filed in the United States District Court for the Northern District of
Illinois on 18 February 2016. The complaints allege that the defendants violated the US antitrust laws by restraining
competition in the market for interest rate swaps through various means and thereby caused inflated bid-ask spreads for
interest rate swaps, to the alleged detriment of the plaintiff class. RBS anticipates moving to dismiss the claims asserted
in these matters.
Investigations and reviews
Payment Protection Insurance
As previously disclosed, RBS is monitoring developments following the UK Supreme Court's decision in the case of Plevin v
Paragon Personal Finance Ltd in November 2014. That decision was that the sale of a single premium PPI policy could create
an 'unfair relationship' under s.140A of the Consumer Credit Act 1974 (the 'Consumer Credit Act') because the premium
contained a particularly high level of undisclosed commission. The Financial Ombudsman Service (FOS) has confirmed on its
website that unfair relationship provisions in the Consumer Credit Act and the Plevin judgment are 'potentially relevant
considerations' in some of the PPI complaints referred to FOS. On 27 May 2015, the FCA announced that it was considering
whether additional rules and/or guidance are required to deal with the impact of the Plevin decision on complaints about
PPI generally.
On 26 November 2015, the FCA issued Consultation Paper 15/39, in which it sets out proposed rules and guidance for how
firms should handle PPI complaints fairly in light of the Plevin decision and how the FOS should consider relevant PPI
complaints. The Consultation Paper also contains proposals for the introduction in 2018 on a date to be confirmed of a
deadline for submission of PPI complaints. The deadline for submitting a response to the Consultation Paper is 26 February
2016. RBS intends to respond.
The proposals in the Consultation Paper include an FCA-led communications campaign to raise awareness of the deadline and
to prompt those who intend to complain to act ahead of the deadline. If the proposals are agreed and implemented, RBS
expects higher claims volumes, persisting longer than previously modelled, and additional compensation payments in relation
to PPI claims made as a result of the Plevin judgment.
Complaints made after the proposed 2018 deadline would lose the right to be assessed by firms or by the Financial Ombudsman
Service, bringing an end to new PPI cases in 2018.
PPI complaint volumes during Q4 2015 were in line with previous trends. Actual payments made to settle PPI claims during Q4
covered the four month period from 1 September until 31 December 2015. This is in contrast to payments made during Q3,
which covered the period from 1 June until 31 August 2015. This change was due to enhanced operating processes introduced
in Q4 2015.
Notes
4. Litigation, investigations and reviews (continued)
RBS has made provisions totalling £4.3 billion to date for PPI claims, including £0.5 billion in Q4 2015, of which £3.3
billion had been utilised by 31 December 2015.
Credit default swaps (CDS) investigation
As previously disclosed, in April 2011 the EC opened an antitrust investigation into the CDS information market to which
RBS was a party. In general terms, the EC raised concerns that a number of banks, Markit and ISDA may have jointly
prevented exchanges from entering the CDS market. On 4 December 2015 the EC decided to close the case against RBS and the
other bank parties to the investigation. Markit and ISDA remain party to the investigation.
US/Swiss tax programme
As previously disclosed, in August 2013 the Department of Justice (DOJ) announced a programme for Swiss banks (the
Programme) which provides Swiss banks with an opportunity to obtain resolution, through non-prosecution agreements or
non-target letters, of the DOJ's investigations of the role that Swiss banks played in concealing the assets of US tax
payers in offshore accounts (US related accounts). In December 2013, Coutts & Co Ltd., a member of the Group incorporated
in Switzerland, notified the DOJ that it intended to participate in the Programme. As required by the Programme, Coutts &
Co Ltd. subsequently conducted a review of its US related accounts and presented the results of the review to the DOJ. On
23 December 2015, Coutts & Co Ltd. entered into a non-prosecution agreement (the NPA) in which Coutts & Co Ltd. paid a
US$78.5 million penalty and acknowledged responsibility for certain conduct set forth in a statement of facts accompanying
the agreement. Under the NPA, which has a term of four years, Coutts & Co Ltd. is required, among other things, to provide
certain information, cooperate with DOJ's investigations, and commit no US federal offenses. If Coutts & Co Ltd. abides by
the NPA, the DOJ will not prosecute it for certain tax-related and monetary transaction offenses in connection with US
related accounts.
German prosecutor investigation into Coutts & Co Ltd.
A prosecuting authority in Germany undertook an investigation into Coutts & Co Ltd. in Switzerland, and current and former
employees, for alleged aiding and abetting of tax evasion by certain Coutts & Co Ltd. clients. Coutts & Co Ltd. cooperated
with the relevant authorities and on 4 December 2015 paid EUR 23.8 million to settle the investigation against it. The
settlement amount was covered by an existing provision.
5. Recent developments
Preference share dividends
The Group has resumed payments on all discretionary non-equity capital instruments following the end of the European
Commission ban in 2012 for RBS and 2013 for RBS N.V. 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 macro-prudential policy discussions, the Board decided to partially neutralise any impact on
CET1 capital of coupon and dividend payments for 2013, 2014 and 2015. £300 million of new equity was issued during the
course of 2015 and the Board has decided a further £300 million of new equity will be issued during the course of 2016 to
again partially neutralise the CET1 impact of coupon and dividend payments.
Statement of directors' responsibilities
The responsibility statement below has been prepared in connection with the Group's full Annual Report and Accounts for the
year ended 31 December 2015.
We, the directors listed below, confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with International Financial Reporting Standards, give a true and
fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in
the consolidation taken as a whole; and
· the Strategic Report and Directors' report (incorporating the Business review) include a fair review of the
development and performance of the business and the position of the company and the undertakings included in the
consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
By order of the Board
Howard Davies Ross McEwan Ewen Stevenson
Chairman Chief Executive Chief Financial Officer
25 February 2016
Board of directors
Chairman Executive directors Non-executive directors
Howard Davies Ross McEwanEwen Stevenson Sandy CrombieAlison DavisMorten FriisRobert Gillespie
Penny Hughes
Brendan NelsonBaroness NoakesMike Rogers
Forward-looking statements
Certain sections in this document contain 'forward-looking statements' as that term is defined in the United States Private
Securities Litigation Reform Act of 1995, such as statements that include the words 'expect', 'estimate', 'project',
'anticipate', 'believe', 'should', 'intend', 'plan', 'could', 'probability', 'risk', 'Value-at-Risk (VaR)', 'target',
'goal', 'objective', 'may', 'endeavour', 'outlook', 'optimistic', 'prospects' and similar expressions or variations on
these expressions.
In particular, this document includes forward-looking statements relating, but not limited to: The Royal Bank of Scotland
Group's (RBS) restructuring which includes the separation and divestment of Williams & Glyn, the proposed restructuring of
RBS's CIB business, the implementation of the UK ring-fencing regime, the implementation of a major development program to
update RBS's IT infrastructure and the continuation of its balance sheet reduction programme, as well as capital and
strategic plans, divestments, capitalisation, portfolios, net interest margin, capital and leverage ratios and requirements
liquidity, risk-weighted assets (RWAs), RWA equivalents (RWAe), Pillar 2A, return on equity (ROE), profitability,
cost:income ratios, loan:deposit ratios, AT1 and other funding plans, funding and credit risk profile; litigation,
government and regulatory investigations RBS's future financial performance; the level and extent of future impairments and
write-downs; including with respect to Goodwill; future pension contributions and RBS's exposure to political
- More to follow, for following part double click ID:nRSZ2357QfRecent news on Natwest
See all newsREG - Permanent TSB Group NatWest Group plc - Holding(s) in Company
AnnouncementREG - Permanent TSB Group NatWest Group plc - Sale of Shares by Natwest
AnnouncementREG - NatWest Group plc - Successful disposal of shares in Permanent TSB
AnnouncementREG - NatWest Group plc - Intention to sell shares in Permanent TSB
AnnouncementREG - Higher Education Sec - Doc re. LSE Investor Report
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