Annual Report and Accounts Total income up 10% Profit before tax up 16% Dividend up 25% Adjusted earnings per share up 14%

Transcription

1 Annual Report and Accounts 2006 Profit before tax up 16% Total income up 10% Dividend up 25% Adjusted earnings per share up 14% rbs.com Make it happen

2 Highlights of 2006 Contents Group operating profit up 14% to 9.4 billion Profit before tax up 16% to 9.2 billion 02 Financial highlights 04 Chairman s statement 06 Group Chief Executive s review 08 Group profile 10 Divisional profile Total dividend for the year of 90.6p per share, up 25% Share repurchase of 1 billion completed Income up 10% to 28.0 billion Cost:income ratio improved from 42.4% to 42.1% Adjusted earnings per ordinary share up 14% to 200.0p Divisional review 12 Corporate Markets 18 Retail Markets 24 Ulster Bank 26 Citizens 30 RBS Insurance 34 Manufacturing Corporate Responsibility 38 Corporate Responsibility 40 Key Achievements 41 Community Investment Report and accounts 43 Operating and financial review 101 Governance 127 Financial statements 225 Additional information 251 Shareholder information 1

3 Financial highlights Income ( m) Adjusted cost:income ratio (%) Group operating profit profit before tax, purchased intangibles amortisation, integration costs, and net gain on sale of strategic investments and subsidiaries in 2005 ( m) IFRS 28,002 25,569 22,515 pro forma IFRS pro forma IFRS 9,414 8,251 7,108 pro forma UK GAAP 22,754 19,281 17, UK GAAP UK GAAP 8,101 7,068 6,540 The Group s total income grew by 10% to 28,002 million in The Group s cost:income ratio was 42.1%. The cost:income ratio is calculated excluding purchased intangibles amortisation, integration costs and net gain on sale of strategic investments and subsidiaries, and after netting operating lease depreciation against rental income. Group operating profit increased by 14% to 9,414 million in Profit before tax ( m) Adjusted earnings per share (pence) Dividend per ordinary share (pence) IFRS 9,186 7,936 6,543 pro forma IFRS pro forma UK GAAP 6,917 6,076 4, UK GAAP Group profit before tax rose by 16% to 9,186 million in Earnings per share increased by 14% to 200.0p for 2006, adjusted for purchased intangibles amortisation, integration costs, and net gain on sale of strategic investments and subsidiaries in 2005, and in for the AVS dividend. The directors have recommended a final dividend of 66.4p per ordinary share which, when added to the interim dividend of 24.2p, makes a total for 2006 of 90.6p, an increase of 25%. Financial highlights Note: The accounts are prepared in accordance with International Financial Reporting Standards. Certain standards relating to financial instruments were not adopted until January The Group has provided comparative information on a pro forma basis that includes the estimated effect of these standards for the year ended 31 December

4 Total shareholder return performance Index 80 The graph illustrates the performance of the company over the past five years in terms of total shareholder return compared with that of the companies comprising the FTSE 100 Index. This Index has been selected because it represents a cross-section of leading UK companies. The total shareholder return for the company and the FTSE 100 have been rebased to 100 for RBS FTSE 100 Source: Datastream Market capitalisation ( bn) Share price performance % change RBS FTSE FTSE 350 Banks 10, , The Group s market capitalisation at 31 December 2006 was 62.8 billion compared with 56.1 billion a year earlier. 3

5 Chairman s statement Chairman s statement In 2006, the Group once again demonstrated its inherent strength and breadth, achieving impressive growth and capital generation enabling us to increase the dividend by 25% and raise our payout ratio to 45%. At last year s AGM, Sir George Mathewson stood down as Chairman and the Board appointed me as his successor. George s 18 years at the helm of RBS, as Group Chief Executive and latterly Chairman, marked an extraordinary period of growth and success. I thank him for the fine legacy he provided and for all the help he gave me in ensuring a smooth and easy transition. Over the last year I have travelled widely across the Group, meeting many employees, customers and shareholders in Europe, the US and across the Asia Pacific region. I have been deeply impressed with the RBS people I have met and have found our businesses to be in good health, continuing to grow strongly and making significant impact in their respective markets. Financial performance and use of capital In 2006 the Group operating profit increased by 14% to 9,414 million (2005 8,251 million). Total income grew by 10% to 28,002 million ( ,569 million), while operating expenses grew by just 8% to 12,252 million ( ,298 million). Impressive profit growth in 2006 coupled with increased distribution, which helped minimise the capital required to support origination, enabled us to be strongly capital generative. As a consequence, the Board is recommending raising the total dividend by 25%, which raises the payout ratio to 45%. In addition, we completed the repurchase of 1 billion of shares announced last year. Our adjusted return on equity increased to 19.0% from 18.2% in 2005, and our total shareholder return in 2006 was 18%, in line with the average over the last decade. Bonus share issue The company s shares traded at an average price of over the course of 2006 and have moved higher since. This is significantly above the average share price of companies trading on the London Stock Exchange and we believe that many shareholders prefer to deal in shares with a lower price per share, more in line with the average. We therefore propose to adjust the price per share by a bonus issue of two new ordinary shares of 25p for each ordinary share held. Staff profit sharing This is the ninth successive year we have announced a profit share of 10% of salary for all eligible employees, in addition to performance bonuses. On behalf of the Board, I would like to express my warm thanks to our people for all they have done to deliver our success. Board of directors I would also like to thank my Board colleagues for their commitment and support during The economy and environment In general, we have enjoyed benign economic conditions which have proved favourable to our businesses, though there have been and will continue to be challenges. The Group is well positioned for growth in all its geographies and invested 2.8 billion in infrastructure in 2006 to support our growth ambitions. In the UK there has been much debate about the retail banking model. Studies have shown that the UK has one of the most efficient and competitive banking services in the world, offering excellent value to customers overall. With the largest branch network and the highest customer satisfaction scores amongst our peers we are confident that we will be able to respond effectively to any changes which may occur in the marketplace. The environment has appropriately become the focus of much attention. I am pleased to say that with our adoption of the revised Equator Principles and our approach to sustainability in all we do, RBS has established a fine reputation as a responsibly managed company. I have been proud to serve as your Chairman in 2006 and look forward to the continuing progress of The Royal Bank of Scotland Group. Sir Tom McKillop Chairman 4

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7 Group Chief Executive s review Group Chief Executive s review 6

8 The Group maintained strength and momentum in 2006 with higher earnings growth and an improved return on equity. All our growth was organic and all our divisions contributed to it. We increased our total income by 10% and held our cost growth to 8%. Group operating profit increased by 14% to 9,414 million. We are building a group whose diversity, scale, distribution capacity and operational excellence can deliver superior, sustainable income growth, controlled risk and strong returns. Our 2006 results demonstrate once again the success of this model with particularly strong performances from Global Banking & Markets ( GBM ), UK Corporate Banking, Wealth Management and Ulster Bank. UK Retail banking, Citizens and RBS Insurance made good progress in the face of headwinds in their markets. In 2006, we continued to build our market share in UK retail, commercial and corporate banking, increased our customer base in Europe and made good progress in building a platform for sustained growth in North America. We have also laid the foundations for a growing share in the vibrant financial services markets of the Asia Pacific region. The breadth of the Group s businesses is reflected in our results: 42% of our operating profit came from our international operations. Sound control of risk is fundamental to the Group s business. While we grew average customer lending by 14%, impairment losses have increased by just 10%. Central to this is our longstanding aversion to sub-prime lending, wherever we do business. We have also maintained the customer-driven nature of our trading activities, as reflected in trading income growth of 14%, compared with an increase of only 9% in our average daily value at risk. Our customers The Group continues to hold the highest market share in UK corporate banking and we are now the joint leader in the personal current account market. RBS has once again secured top position and NatWest is joint second among major High Street banks for extremely satisfied customers, and we continued to invest in the expansion of our branch network in the UK. Through Ulster Bank we expanded across the island of Ireland, and in the US, Citizens continued to broaden its customer base through the expansion of its credit card, merchant acquiring, small business and midcorporate activities. Our GBM and Wealth Management businesses are growing rapidly in Asia. Our shareholders The capital generated by our businesses during 2006 has enabled us to invest in profitable organic growth across the Group, carry out a 1 billion share buyback and we propose to raise our payout ratio to 45% through a final dividend of 66.4p, making a total of 90.6p for the year, an increase of 25%. Our people Our performance is the result of the hard work, energy and dedication of our 135,000 employees. We have made significant progress in recent years in the development of our people, by seeking and then acting upon feedback from them. A record 87% of our employees participated in the 2006 Employee Opinion Survey and we outperformed the Global Financial Services norm in every category. Our people told us, and our results demonstrate, that the Group provides a rewarding and stimulating working environment for personal and professional development. We continue to listen to them and invest to maintain our market-leading position. Bank of China We have made good progress in developing our partnership with Bank of China. Our joint credit card business has already issued 1.2 million cards, we are establishing a joint private banking business and have together completed a number of significant transactions in shipping, aviation and trade finance. Outlook Our proven business model delivered strong results in We are expanding our reach and making progress in all the major economies we operate in. We believe that the strategic choices we have made, together with the prospects for continued growth in the world economy, position us well for We remain confident in the Group s ability to take advantage of the many opportunities to invest profitably in sustainable growth. Sir Fred Goodwin Group Chief Executive 7

9 Group profile United Kingdom US Corporate Markets Retail Markets Ulster Bank RBS Insurance Manufacturing Corporate Markets Citizens 2006 Income ( bn) 20.4 Operating profit ( bn) 5.5 Loans to customers ( bn) 318 Deposits by customers ( bn) 280 Employees 100, Income ( bn) 4.8 Operating profit ( bn) 2.4 Loans to customers ( bn) 92 Deposits by customers ( bn) 78 Employees 24,800 Group profile 8

10 Europe Asia Pacific Corporate Markets Retail Markets Ulster Bank RBS Insurance Manufacturing Corporate Markets Retail Markets Manufacturing 2006 Income ( bn) 2.5 Operating profit ( bn) 1.4 Loans to customers ( bn) 47 Deposits by customers ( bn) 10 Employees 7, Income ( bn) 0.3 Operating profit ( bn) 0.1 Loans to customers ( bn) 10 Deposits by customers ( bn) 16 Employees 1,900 9

11 Divisional profile Corporate Markets Corporate Markets is aligned around two groups of customers: Global Banking & Markets is a leading banking partner to major corporations and financial and governmental institutions around the world, providing an extensive range of debt, risk and investment services; and UK Corporate Banking is the largest provider of banking, finance and risk management services to UK corporate and commercial customers key highlights No 1 for Global Asset Backed Securities and Mortgage Backed Securities No 1 for Project Finance globally No 5 for Foreign Exchange globally No 6 for All Debt globally Contribution ( m) Location in this report: page ,122 5,165 Retail Markets Retail Markets provides a broad range of retail services across different brands and channels to our personal and small business customers. It has four distinct business areas: Consumer Banking, Business Banking and Cards & Direct Finance in the UK; and Wealth Management in the UK, continental Europe and the Asia Pacific region key highlights No 1 for customer satisfaction (Royal Bank of Scotland) No 1 for small and medium business banking No 1 bank for students (NatWest) Contribution ( m) Location in this report: page ,364 4,191 Ulster Bank Ulster Bank provides a broad range of banking and other financial services for personal and corporate customers across the island of Ireland, through branches, the telephone and the internet. It has the largest share of personal and business customers in Northern Ireland and is the third-largest bank in the Republic of Ireland key highlights No 1 for personal customers in Northern Ireland No 1 for business customers in Northern Ireland No 3 bank in the Republic of Ireland Divisional profile Location in this report: page 24 Contribution ( m)

12 Citizens Citizens provides retail and corporate banking services through the Citizens and Charter One brands across 13 states in the northeastern and midwestern US, with a retail and commercial presence in more than 30 other states. Activities include personal banking, residential mortgages, cash management, credit card products, merchant servicing and a wide variety of commercial banking services key highlights No 7 in US personal loans No 8 in US deposits No 9 in US assets No 9 in US credit cards Contribution ($m) Location in this report: page ,917 2,867 RBS Insurance RBS Insurance is the second-largest general insurer in the UK and is growing its direct business in Spain, Italy and Germany. It sells and underwrites motor, home and commercial insurance in the UK by telephone, the internet, partnerships and a network of brokers. Its brands include Direct Line, Churchill and Green Flag key highlights No 1 in UK car insurance No 2 in UK home insurance No 2 UK general insurer No 1 UK direct insurer by both phone and internet Contribution ( m) Location in this report: page Manufacturing Manufacturing is the engine room of the RBS Group, supplying processing, telephony, IT, property, purchasing and security expertise to the Group s business divisions. Manufacturing s support and services enable the Group to operate continuously 365 days a year and 24 hours a day, whilst providing a strong, stable and scalable platform for future growth key highlights No 1 in the UK for ATMs No 1 in the UK for low-value payments (BACS) No 1 in the UK for high-value payments (CHAPS) Total costs ( m) Location in this report: page ,852 2,758 11

13 Divisional review Shanghai Time Shipping RBS s strategic partnership with the Bank of China has opened up further opportunities for our Global Banking teams to work together. For Shanghai Time Shipping, one of the largest shippers in China, we successfully completed a $60 million financing facility for the purchase of three vessels. Divisional review Corporate Markets 12

14 Corporate Markets Contribution 6,122 million (2005 5,165 million) Total income up 17% Operating profit up 20% Corporate Markets, formerly Corporate Banking & Financial Markets, was reorganised into two businesses, Global Banking & Markets and UK Corporate Banking, on 1 January This allowed us to focus on the distinct needs of these two customer groups and to enhance our services to them. Global Banking & Markets Global Banking & Markets is a leading banking partner to major corporations and financial and governmental institutions around the world, providing an extensive range of debt financing, risk management and investment services to its customers. UK Corporate Banking UK Corporate Banking is the largest provider of banking, finance and risk management services to UK corporate customers. Through its network of relationship managers across the country it distributes the full range of Corporate Markets products and services to companies. Global Banking & Markets (GBM) GBM has a strong client franchise across our chosen markets. We have relationships with the great majority of the largest UK, US and European corporations and institutions, including over 95% of the FTSE 100, 80% of the Fortune 100, and over 95% of the Dow Jones Eurostoxx 50. GBM s employees serve the diverse needs of major corporates and financial institutions from offices in 21 countries around the world. GBM continues to invest significantly in people, infrastructure and technology to support growth and develop new product capabilities. GBM made significant progress in building its business internationally in Income grew by 18% in the US, 26% in Europe and 35% in the Asia Pacific region. To support international expansion we made significant investments in new offices and locations. Construction work started on new premises, which will bring together our people from RBS Greenwich Capital and RBS New York; a new office in Helsinki opened on 1 September 2006; and we moved to larger premises in Tokyo, Hong Kong and Singapore. Examples of GBM client transactions RBS teams in Spain and the UK successfully arranged the financing of the 15 billion acquisition of BAA, the world s leading airport operator, by a consortium led by Ferrovial. This complex transaction benefited from our knowledge of the Spanish and UK markets as well as our global distribution capabilities. RBS helped Arsenal Football Club sell 260 million secured long-dated bonds to refinance the shorter-term construction loans used to fund their new Emirates Stadium. The deal was described by Euroweek as arguably the most comprehensive application of structured finance techniques in an asset-backed securitisation deal yet in Europe. 13

15 Divisional review continued Corporate Markets continued Divisional review Corporate Markets In North America, RBS financed the energy sector s largest acquisition to date, that of Burlington Resources by ConocoPhillips, for $35 billion. We played the lead role as administrative agent on $22.5 billion of credit facilities, including $15 billion of bridge facilities to finance the cash portion of the acquisition and $7.5 billion of permanent debt facilities. RBS Greenwich Capital was also joint Bookrunner on $3 billion of related debt capital markets issuances. RBS was selected by German industrial conglomerate Siemens as one of six banks arranging $4 billion acquisition finance facilities and one of four joint lead managers for Europe s largest-ever hybrid bond issue of 900 million and 750 million. We arranged acquisition financing for the newly built Kamppi Shopping Centre in central Helsinki. The owners agreed to sell the company to a new company established by Boultbee, a specialist shopping centre manager, and RBS, for 345 million. The shopping centre opened in March 2006 and was visited by more than three million people in its first month. RBS Structured Ship Finance successfully completed a financing programme in China for three ships for Shanghai Time Shipping for $60 million. We enabled the company to secure the ships offshore at attractive prices, and charter them in a strong international market. We also obtained Chinese government approvals to import, flag and register the vessels. This was the first joint ship financing by RBS working with Bank of China as its strategic partner in the Chinese market. RBS acted for Leighton Holdings Limited, Australia s largest construction and contract mining group, as Bookrunner, Mandated Lead Arranger, Residual Value Guarantor and joint Lead Manager for an AU$750 million leveraged operating lease facility and associated senior debt and bond financing. The purpose was to enable Leighton to fund their equipment requirements in a flexible and capital efficient maner. We were one of two joint Bookrunners and joint Lead Arrangers on Hutchison Whampoa Ltd s inaugural 700 million sterling debt capital issue. The company took advantage of attractive sterling market conditions, benefiting from a strong appetite for corporate names in longer-dated maturities, to launch and price an 11 and 20-year dual-tranche issue successfully. To date this is the largest ever sterling issue by a non-japanese Asia Pacific corporate. Ferrovial Our Global Banking teams in both Spain and the UK worked together to secure the 15 billion of acquisition funding required by Spanish infrastructure company, Ferrovial, for the purchase of BAA. Our knowledge of both the Spanish and UK markets and global distribution capability were important attributes for Ferrovial in selecting RBS. BAA Limited see 14

16 Renewable energy Last year RBS was the largest provider of funding for renewable energy projects and is the market leader internationally for wind farm financing, with over 1 billion of funding for projects globally. 15

17 Divisional review continued Corporate Markets continued Divisional review Corporate Markets UK Corporate Banking (UKCB) UKCB has over 90,000 customers and over 8,500 employees. UKCB s approach to relationship management provides customers with access to the resources of one of the world s largest financial groups through a local point of contact. UKCB works closely with GBM to provide specialist products and distribution for larger clients. We have made significant investment in additional international trade services and specialists to help our UK customers to trade in international markets has seen strong growth in both lending and deposits across UKCB, reflecting the successful growth of our customers businesses. Commercial Banking serves customers with turnover between 1 million and 25 million. It operates under the Royal Bank of Scotland and NatWest brands and is the No 1 commercial relationship bank in the UK, with just under 1,000 relationship managers. Corporate Banking is the UK s No 1 bank for businesses with turnover in excess of 25 million, and operates in the UK and offshore. It offers a combination of dedicated relationship directors and specialist sector teams. Corporate Banking continues to be a market leader in the provision of funding and risk management products to mid-market corporate customers in the UK. RBS Invoice Finance is a leading invoice finance provider in Europe with over 8,000 clients. It operates from 25 locations across the UK and continental Europe. Both the French and German businesses now trade under the RBS Group brand. Lombard is the UK s leading provider of finance and leasing facilities for business assets. It has a comprehensive network of business centres across the UK and Ireland as well as specialist units for the aviation, corporate, marine, technology services and vehicle management markets. Examples of UKCB client transactions RBS was instrumental in assisting Mitchells & Butlers, the pub and restaurant operator, to relever its asset portfolio, involving transactions totalling more than 2 billion. This allowed it to refinance existing debt, fund a strategically important acquisition and make a substantial cash payment to its shareholders. RBS Corporate Banking organised an innovative 1 billion debt structure for Barchester Healthcare. RBS Corporate Banking in Birmingham led and co-arranged a 750 million syndicated facility for Pendragon, the UK s leading motor retailer group. RBS Corporate Banking in Yorkshire was the joint underwriter and provider of 450 million senior debt and revolving credit facilities to support Croda with its acquisition of Uniqema. WA Developments Group WA Developments Group includes the UK s largest haulage company, Eddie Stobart. RBS Corporate Banking, RBS Invoice Finance and Lombard provided a refinance package to assist the company s future growth and development. 16

18 Alder Sportswear Distributors of watersports equipment Alder Sportswear recently moved to NatWest Commercial Banking in Exeter believing that our products and services would help them move their business forward. RBS financial products included international trade finance, invoice finance and foreign exchange hedging, allowing the company to concentrate on product design, development and distribution. Selected awards RBS Corporate Banking in Manchester was the joint Mandated Lead Arranger of a 300 million revolving credit facility for Manchester Airport. RBS Commercial Banking in Scotland provided SBS Marine with a 30 million funding package that enabled both a buy-out and an expansion of the fleet from three to six vessels. In a transaction worth 8.5 million, Lombard financed Asda s 2006 refrigerated trailer replacement programme of over 200 trailers on a five year lease. NatWest Commercial Banking in Truro provided a 3 million funding package to help AE Rodda & Son, the largest manufacturer of Cornish clotted cream, to expand and keep up with demand from the major supermarkets. RBS provided a trade cycle finance facility of 2.3 million to Shubiz, designers and importers of ladies shoes from the Far East. RBS Commercial Banking in Cardiff provided 1.5 million debt funding for Freshwater UK, which enabled this Welshbased communications agency to make a further acquisition that will help grow turnover by 50% to around 6 million in 2006/07. RBS Corporate Banking in Southampton provided a debt package to support Graphite Capital in the purchase of the largest UK independent tyre wholesaler, distributor and retailer, Micheldever Tyre Services. RBS Corporate Banking in Scotland provided Wolfson MicroElectronics with a revolving credit facility complemented by international cash management, corporate treasury and trade finance solutions to help the firm focus on building its business and expanding into new markets. As well as supplying the AA s iconic yellow patrol vans and company cars, Lombard is funding over 12,000 AA Driving School vehicles over a three year period. Global Banking & Markets (GBM) Best Global Project Finance House of the Year Project Finance Sector Euromoney European Leveraged Finance House of the Decade Financial News European Securitisation House of the Year ifr Awards 2006 Most Impressive Arranger, Loans Poll Euroweek Best Bank Fixed Income The 2006 Treasury Management International Awards Currency Derivatives House of the Year Risk Magazine Asset Backed Securities Arranger 2006 International Securitisation Report Best Debt Provider European Private Equity Awards 2006 Asia Shipping Debt Deal of the Year 2006 Shanghai Time Shipping Jane s Transport Finance UK Corporate Banking (UKCB) Debt Provider of the Year Unquote Private Equity Awards, 2006 Best Short-Term Trade Finance Bank Trade & Forfaiting Awards 2006 Best Use of IT in Wholesale Banking Financial Sector Technology Awards 2006 RBS Corporate Banking has provided the Haymarket Group with a long-dated finance package to support growth aspirations. 17

19 Divisional review Savings products 2006 saw strong growth in our savings and investment products with a 56% increase in bancassurance sales. We increased the number of financial planning managers in our branch network by 25%. Divisional review Retail Markets 18

20 Retail Markets Contribution 4,364 million (2005 4,191 million) Total income up 5% Operating profit up 5% Retail Markets focuses on serving our personal and small business customers. It was established in June 2005 to strengthen the co-ordination of our full range of retail banking services across our brands and channels in the UK. In December 2006 we created four distinct business areas: Consumer Banking, Business Banking and Cards & Direct Finance operate in the UK; and Wealth Management serves customers in the UK, continental Europe and the Asia Pacific region. Consumer Banking Consumer Banking is joint first in the UK current account market and the leading provider in the UK student current account market. We continue to grow our share of the UK savings market. The number of savings accounts taken out with NatWest in 2006 grew by 11%, and balances grew by 14%, helped by significant improvements to the speed and ease of opening an account either in a branch, by telephone or via the internet. NatWest was again the No 1 choice for student accounts, with 42% of first-year students in England and Wales opening their current account with us. Amongst high street bank customers who rate themselves extremely satisfied with their main current account provider, the Royal Bank of Scotland retained top position and NatWest was again joint second. With over 2,250 branches, the Royal Bank of Scotland and NatWest have the UK s largest branch network. We also have the largest free-to-use ATM network, with over 6,600 under the Royal Bank of Scotland, NatWest and Tesco Personal Finance brands. The Royal Bank of Scotland and NatWest maintained our commitment to development of the branch network, opening new branches, refurbishing or upgrading dozens of branches, increasing the number of branches open on Saturdays, and adding mobile bank routes in South Wales and Aberdeenshire. We have one million new active telephone and internet users, with an annual growth in active usage of more than 25%. Since May 2006, customers have been automatically enrolled for telephone and internet banking when opening a new account. 5.4 million customers use our telephone banking service every month. Our Customer Account Opening system enables our customers to open additional accounts within minutes, whether they use branches, telephone or the internet. We launched RBS Intermediary Partners, providing intermediaries with one point of contact for the Group s main mortgage brands: Royal Bank of Scotland, NatWest, First Active and the One account. We launched Royal Bank of Scotland and NatWest Lifetime Mortgages, offering existing customers a no negative equity guarantee and an option of either a monthly income, lump sum or combination of both; and an interest rate fixed for life. We launched the new NatWest and RBS Private Banking services, which are tailored to the needs of customers who typically earn more than 100,000 a year, or with 50,000 or more to save or invest. We offer the choice of a local relationship manager or advice by phone through the new Private Banking Direct service. A dedicated range of products and services, including flexible borrowing facilities, guaranteed deposits and an enhanced mortgage service have enabled us to build on the Group s position as the UK s No1 provider of current accounts amongst this high income group. 19