REG - Royal Bk Scot.Grp. - Final Results - Part 2 <Origin Href="QuoteRef">RBS.L</Origin> - Part 7

NatwestAnnouncement

26/02/2015 07:14

- Part 7: For the preceding part double click  ID:nRSZ9136Ff 

 ·  France - net balance sheet exposure rose by £2.2 billion to £16.1 billion, mainly reflecting debt trading fluctuations and increased derivatives exposure to banks and SFT. Lending to the public, CRE and telecommunications sectors decreased. RBS had £6.8 billion government bond holdings at 31 December 2014 (AFS - £1.1 billion; HFT long positions - £5.7 billion). Off-balance exposure fell by £1.2 billion to £8.6 billion, particularly in the corporate and government sectors.                                                                              
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
 ·  Netherlands - net balance sheet exposure fell by £1.2 billion to £14.7 billion, as a result of reductions in AFS debt securities in the RBS N.V. liquidity portfolio and in cash deposits held with the central bank, as RBS N.V.'s liquidity needs decreased in line with balance sheet reductions. Net HFT exposure rose by £1.7 billion through normal market fluctuations while derivatives exposure increased by £1.1 billion to £6.8 billion, largely driven by business with a few major banks.                                                                    
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
 ·  Belgium - net balance sheet exposure increased by £0.8 billion to £3.6 billion, mostly in HFT government bonds and derivatives exposure to banks.                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
 ·  Other eurozone - net HFT government bonds increased by £0.6 billion to £0.9 billion, reflecting increased long positions.                                                                                                                                                                                                                                                                                                                                                                                                                                                 
 
 
Appendix 1 Capital and risk management 
 
Overview and key developments (continued) 
 
 ·  Japan - HFT government bond exposure increased by £3.2 billion to £3.0 billion, driven by market fluctuations. This rise was partly offset by reductions in central bank deposits, in corporate and bank lending, and in derivatives and SFT exposure to financial institutions. In 2015, RBS will be closing its onshore trading business and withdrawing from Japanese government primary bonds dealership activity.                                                                                      
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 ·  China - lending to banks and off-balance sheet exposure decreased by £1.9 billion and £1.2 billion respectively to £0.7 billion and £0.5 billion, mostly in trade finance, driven by more stringent capital requirements and an effort by RBS to improve average returns in a highly competitive environment. Given concerns about economic risks, RBS undertook stress testing across both financial institutions and corporate portfolios and started setting early warning indicators and action plans.  
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 ·  India - net balance sheet exposure fell by £1.7 billion to £2.0 billion, with reductions in corporate lending, particularly in the oil and gas and mining & metals sectors, and in lending to banks, largely trade finance. The reductions in part reflected increasing capital requirements and sales of low-yielding assets.                                                                                                                                                                              
 ·  Russia - net balance sheet exposure was £1.8 billion and included £0.9 billion corporate lending and £0.7 billion bank lending, around half of which was fully hedged. Internal ratings were reviewed, additional credit restrictions placed on new business, and limits adjusted downwards. Exposures were reviewed against all international sanctions.                                                                                                                                                   
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 ·  South Korea - net lending to banks and corporate clients decreased by £0.4 billion, reflecting a greater focus on capital efficiency. Net balance sheet exposure was £1.3 billion.                                                                                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 ·  Turkey - net balance sheet exposure fell by £0.4 billion to £1.2 billion, mainly reflecting lower lending to corporates.                                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
 ·  Shipping - exposures relating to ocean-going vessels are not included in the country risk disclosures as they cannot be meaningfully assigned to specific countries. RBS's shipping portfolio of £10.4 billion (refer to the Credit risk section for more details) is predominantly US dollar-denominated and under English law, and is not expected to be affected by specific country events.                                                                                                             
 
 
Appendix 1 Capital and risk management 
 
Summary of country exposures 
 
                                                                                                                                                                                                                                                                                                 
                   Net balance sheet exposure         Analysis of net balance sheet exposures            Off-                              CDS                                              
 Govt              Central                     Other  Other                                                                       Net                 Debt securities               Net     balance  Total            notional less          Gross        
 banks             banks                       FI     Corporate                                Personal  Total   lending          AFS/LAR  HFT (net)                   Derivatives  SFT     sheet    exposure         fair value             Derivatives  SFT      
 31 December 2014  £m                          £m     £m                                       £m        £m      £m       £m               £m                          £m           £m               £m        £m                    £m                   £m         £m         £m       £m      
                                                                                                                                                                                                                                                                                                 
 Eurozone                                                                                                                                                                                                                                                                                        
 Ireland           239                         587    726                                      839       5,653   14,593   22,637           21,176                      56           413              991       1                     2,922                25,559     (48)       2,330    1,464   
 Italy             112                         15     2,519                                    368       1,187   25       4,226            1,095                       169          5                2,957     -                     2,031                6,257      (625)      9,192    823     
 Spain             251                         -      583                                      164       2,184   88       3,270            2,024                       47           364              835       -                     1,923                5,193      (312)      3,913    422     
 Portugal          111                         -      246                                      97        322     8        784              282                         20           152              330       -                     222                  1,006      (155)      390      613     
 Greece            8                           -      258                                      1         92      17       376              63                          -            8                305       -                     23                   399        (8)        416      -       
 Cyprus            -                           -      -                                        -         113     14       127              108                         -            -                19        -                     16                   143        -          19       -       
                                                                                                                                                                                                                                                                                                 
 Eurozone                                                                                                                                                                                                                                                                                        
 periphery         721                         602    4,332                                    1,469     9,551   14,745   31,420           24,748                      292          942              5,437     1                     7,137                38,557     (1,148)    16,260   3,322   
                                                                                                                                                                                                                                                                                -        -       
 Germany           12,301                      2,681  3,940                                    5,496     2,083   86       26,587           4,601                       7,121        5,653            8,317     895                   6,090                32,677     (1,749)    39,275   8,704   
 France            5,203                       3      7,089                                    1,924     1,774   81       16,074           2,931                       1,951        4,034            6,392     766                   8,586                24,660     (2,406)    41,132   17,598  
 Netherlands       72                          926    5,557                                    5,981     2,130   29       14,695           3,582                       1,690        2,509            6,830     84                    9,323                24,018     (815)      20,986   3,573   
 Belgium           803                         3      2,330                                    93        396     21       3,646            579                         274          375              2,334     84                    858                  4,504      (219)      3,374    932     
 Luxembourg        (1)                         19     556                                      645       781     5        2,005            968                         329          70               461       177                   1,475                3,480      (53)       701      2,628   
 Other             1,689                       19     762                                      132       533     16       3,151            612                         456          930              1,148     5                     1,047                4,198      (562)      4,818    302     
                                                                                                                                                                                                                                                                                                 
 Total                                                                                                                                                                                                                                                                                           
 eurozone          20,788                      4,253  24,566                                   15,740    17,248  14,983   97,578           38,021                      12,113       14,513           30,919    2,012                 34,516               132,094    (6,952)    126,546  37,059  
                                                                                                                                                                                                                                                                                                 
 Japan             3,257                       1,007  1,927                                    514       325     33       7,063            1,633                       3            3,043            2,358     26                    844                  7,907      (25)       10,129   10,005  
 China             329                         130    1,011                                    363       1,674   41       3,548            2,886                       243          62               243       114                   531                  4,079      (4)        244      4,770   
 India             526                         85     133                                      156       1,053   36       1,989            1,336                       415          132              106       -                     639                  2,628      (47)       180      -       
 Russia            39                          14     711                                      1