SOURCE: Royal Bank of Scotland Group PLC

April 19, 2011 11:03 ET

RBS - Transfer of Activities of RBS NV to RBS plc

EDINBURGH, SCOTLAND--(Marketwire - Apr 19, 2011) -


19th April 2011

Proposed transfers of a substantial part of the business activities of
RBS N.V. to RBS plc

The Boards of The Royal Bank of Scotland Group plc (RBSG), The Royal
Bank of Scotland plc (RBS plc), RBS Holdings N.V. and The Royal Bank of
Scotland N.V. (RBS N.V.) have approved the proposed transfers of a
substantial part of the business activities of RBS N.V. to RBS plc (the
"Proposed Transfers"), subject, amongst other matters, to regulatory
and other approvals, further tax and other analysis in respect of the
assets and liabilities to be transferred and employee consultation
procedures. This follows a period of extensive dialogue with key
regulators and rating agencies. The Proposed Transfers will not include
the Consortium Shared Assets referred to below.

The Proposed Transfers will streamline the manner in which the Global
Banking & Markets (GBM) and Global Transaction Services (GTS)
businesses of RBSG and its subsidiaries and subsidiary undertakings
(the "RBS Group") interact with clients with simplified access to the
GBM and GTS product suites. They will provide benefits to clients in
effecting easier interaction with the RBS Group including management of
collateral. Clients will continue to deal, and conduct business, with
their local RBS teams as at present. There is no requirement for
clients to take any action now and any action required in connection
with the Proposed Transfers will be communicated in a timely way with a
view to ensuring a smooth transition.

The Proposed Transfers will not result in any change to the current
business strategy for any of the transferred RBS N.V. businesses and
the way in which the RBS Group commercially operates will remain
unchanged.

The Proposed Transfers are consistent with RBS Group's efforts to
simplify its structure, thereby reducing risk, cost and complexity. In
addition, the Proposed Transfers are expected to result in a simplified
management and reporting framework for the RBS Group across the
multiple jurisdictions in which RBS plc and RBS N.V. operate.

RBS N.V.'s businesses include the following product areas: Equities &
Structured Retail Products, Emerging Markets, Lending, Global
Transaction Services (GTS), and Short Term Markets & Financing (STMF).
RBS N.V. also currently holds directly and indirectly certain other
assets which are owned by RBSG jointly with the Dutch State and
Santander (the "Consortium Shared Assets"). As at 31 December 2010, RBS
N.V. had consolidated total assets of EUR200.4bn (GBP172.8bn), a Core
Tier 1 Capital Ratio of 8.7% and a Tier 1 Capital Ratio of 11.0%. As at
the same date, RBSG had consolidated total assets of GBP1.5tn, a Core
Tier 1 Capital Ratio of 10.7% and a Tier 1 Capital Ratio of 12.9% and
RBS plc, the receiving entity for the Proposed Transfers, had
consolidated total assets of GBP1.3tn, a Core Tier 1 Capital Ratio of
8.4% and a Tier 1 Capital Ratio of 10.1%. The Proposed Transfers are
not expected to have any impact on RBSG's capital position.

It is expected that the Proposed Transfers will be implemented on a
phased basis over a period ending 31 December 2013. A large part of the
Proposed Transfers (including the transfers of certain securities
issued by RBS N.V.) is expected to have taken place by the end of 2012.
This will be subject, amongst other matters, to regulatory and other
approvals, further tax and other analysis in respect of the assets and
liabilities to be transferred and employee consultation procedures.

RBS plc and RBS N.V. have discussed the Proposed Transfers in detail
with the UK Financial Services Authority and De Nederlandsche Bank
("DNB") and they will continue to be involved as the Proposed Transfers
progress through to completion. Approvals from these and other
regulators will be required prior to execution. Where available and
practicable, statutory transfer schemes will be used to implement the
Proposed Transfers which may require court approval.

Due to legal constraints, securities and related guarantees which are
governed by New York, New South Wales, New Zealand and Hong Kong law
(including the three series of Trust Preferred Securities issued by RBS
N.V. Capital Funding Trusts V, VI and VII) are currently not expected
to be transferred to RBS plc pursuant to the statutory transfer schemes
which are anticipated to be used to implement the Proposed Transfers.
Alternative steps will be considered in relation to such securities and
guarantees, where reasonably practicable in RBS's opinion. In respect
of securities and guarantees governed by other laws which have been
issued by RBS N.V., further analysis is ongoing to establish whether
they will or will not be transferred to RBS plc pursuant to the
Proposed Transfers and further announcements will be made in due
course. In the meantime, holders of RBS N.V. securities are not
required to take any action in connection with the Proposed Transfers.
The proposed transfers of securities from RBS N.V. to RBS plc are not,
of themselves, expected to change the price that RBS plc, as part of
its normal market making activities, may bid for such securities.
However, RBS cannot guarantee the price at which such securities may
trade. The market prices for such securities may be impacted by a
number of factors, including the value of the assets underlying such
securities and prevailing market conditions, any of which may affect
the value of the securities.

For legal, tax and other reasons, there are expected to be certain
operations, assets and other liabilities in RBS N.V. which will not be
transferred to RBS plc. RBSG is committed to providing the necessary
support to ensure that RBS N.V. continues to meet its commitments
during and after the Proposed Transfers. Following completion of the
Proposed Transfers, RBS N.V. will continue to be authorised and
regulated by DNB.

The RBS Group has held detailed discussions on the Proposed Transfers
with the three main rating agencies, Moody's, Standard & Poor's and
Fitch. The plan for the Proposed Transfers has been designed not to
impact the ratings of RBS N.V. or RBS plc. It is anticipated that the
agencies will publish their credit opinions following this
announcement.

Certain unaudited pro forma condensed consolidated financial
information relating to RBS Holdings N.V. is set out in the Appendix to
this announcement.


For Further Information Contact:

RBS Group Investor Relations          RBS Group Media Relations
Emete Hassan,                         Michael Strachan,
Head of Debt Investor Relations       Group Media Centre
+44 207 672 1758                      +44 131 523 4414


Disclaimer

No person should place any reliance on the information in this
announcement concerning securities/guarantees which are expected to be
retained by RBS N.V. in connection with making an investment decision
or for any other purpose and should be aware that changes to the
current proposals (including, without limitation, to the identity of
the securities/guarantees to be retained, the eventual manner in which
securities/guarantees are proposed to be transferred and to the timing
pursuant to which they are proposed to be transferred) may be made if
required, or if determined by RBS N.V. or RBS plc (in their absolute
discretion) to be desirable for commercial or other reasons.
Accordingly, nothing in this announcement should be taken as (or is) a
representation that any of the securities/guarantees of RBS N.V. will
be transferred or retained, whether in the manner described in this
announcement, in accordance with the timing set out in this
announcement, or at all. For the avoidance of doubt, this announcement
has been prepared and circulated solely for information purposes and
does not constitute an offer to any person. If you are in any doubt as
to whether there is any tax or other impact on you as a result of the
Proposed Transfers, please discuss such matters with your advisers.


Cautionary Statement

Certain statements found in this document may constitute "forward-looking
statements" as defined in the U.S. Private Securities
Litigation Reform Act of 1995. Such "forward-looking statements"
reflect management's current views with respect to certain future
events and financial performance and include any statement that does
not directly relate to any historical or current fact. Words such as
"anticipate," "believe," "expect," "estimate," "forecast," "intend,"
"plan," "project" and similar expressions which indicate future events
and trends may identify "forward-looking statements". In particular,
this document includes forward-looking statements relating, but not
limited, to the Proposed Transfers. Such statements are based on
current plans, estimates and projections and are subject to various
risks, uncertainties and other factors that could cause actual results
to differ materially from those projected or implied in the "forward-
looking statements". Certain "forward-looking statements" are
based upon current assumptions of future events which may not prove to
be accurate. Other factors that could cause actual results to differ
materially from those estimated by the forward-looking statements
contained in this document include, but are not limited to: the ability
to complete restructurings on a timely basis; regulatory or legal
changes (including those requiring any restructuring of the operations
of RBSG, RBS plc, RBS Holdings N.V. or RBS N.V.) in the United Kingdom,
the Netherlands, the United States and other countries in which these
entities operate; changes in UK and foreign laws, regulations,
accounting standards and taxes, including changes in regulatory capital
regulations and liquidity requirements; and the success of RBSG, RBS
plc, RBS Holdings N.V. or RBS N.V. in managing the risks involved in
the foregoing.

Undue reliance should not be placed on "forward-looking statements" as
such statements speak only as of the date of this document. Neither
RBSG, RBS plc, RBS Holdings N.V. nor RBS N.V. undertake to update any
forward-looking statement contained herein to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

The information, statements and opinions contained in this document do
not constitute a public offer under any applicable legislation or an
offer to sell or solicitation of any offer to buy any securities or
financial instruments or any advice or recommendation with respect to
such securities or other financial instruments.


Appendix


Unaudited pro forma condensed consolidated financial information
relating to RBS Holdings N.V.


Background

This appendix provides pro forma financial information as at and for
the year ended 31 December 2010 for RBS Holdings N.V. The proposed
transfers of a substantial part of the business activities of RBS N.V.
to RBS plc ("the Proposed Transfers") collectively constitute a
significant event and historical financial information on a pro forma
basis is provided to give investors a better understanding of what the
results of operations and financial position of RBS N.V. might have
looked like had the transfers to RBS plc occurred in respect of the
unaudited pro forma condensed consolidated Statement of Financial
Position as at 31 December 2010 and, in respect of the unaudited pro
forma condensed consolidated income statements on 1 January of the
respective years. The Proposed Transfers are expected to be implemented
on a phased basis over a period ending 31 December 2013.

For the purposes of the pro forma financial information, RBS Holdings
N.V. comprises RBS Holdings N.V. and its consolidated subsidiaries.

The pro forma financial information has been prepared for illustrative
purposes only on the basis of estimates and assumptions about which
assets and liabilities will be transferred. These assumptions are
preliminary and subject to ongoing analysis with respect to which
specific assets and liabilities will in fact be transferred and which
will be retained in RBS N.V. The pro forma information addresses a
hypothetical situation and does not represent the actual position or
the results of RBS Holdings N.V. nor is it necessarily indicative of
the results of operations or financial position that may, or may be
expected to, be achieved in the future.

The pro forma financial information includes the following condensed
consolidated pro forma information for RBS Holdings N.V. (i) a pro
forma condensed consolidated statement of financial position as at 31
December 2010, (ii) a pro forma condensed consolidated income statement
for each of the years ended 31 December 2010, 31 December 2009 and 31
December 2008, and (iii) Notes to the pro forma financial information.

As at the date of this announcement, Management of RBS Holdings N.V. is
not aware of any matters that could impact the results and financial
position as presented in the pro forma financial information.



Unaudited pro forma Condensed Consolidated Statement of Financial
Position as at 31 December 2010

                                                              Pro
                                             Proposed       Forma
                            RBS Holdings    Transfers       Total
                                 N.V.(1)          (2)      (3)(4)
                                    EURm         EURm        EURm

Assets

Cash and balances at central
banks                              8,323        8,142         181
Loans and advances to banks       26,705       25,246       1,459
Loans and advances to customers   44,496       37,476       7,020
Debt securities                   52,260       23,294      28,966
Equity shares                     22,634       21,131       1,503
Settlement balances                3,573        3,399         174
Derivatives                       28,272       25,837       2,435
Other assets                      14,119       10,481       3,638

Total assets                     200,382      155,006      45,376

Liabilities

Deposits by banks                 31,985       10,682      21,303
Customer accounts                 54,905       50,258       4,647
Debt securities in issue          53,411       46,042       7,369
Settlement balances and short
positions                          5,202        4,936         266
Derivatives                       35,673       31,467       4,206
Other liabilities                 14,234        9,049       5,185

Total liabilities                195,410      152,434      42,976

Equity

Non-controlling interests             24           10          14
Shareholders of the parent
company                            4,948        2,562       2,386

Total equity                       4,972        2,572       2,400

Total equity and liabilities     200,382      155,006      45,376


Notes:

(1) This financial information for RBS Holdings N.V. as at 31
December 2010 has been extracted from audited financial information
containedwithin the Annual Report and Accounts of RBS Holdings N.V.
published on 29 March 2011.

(2) This represents the value of the assets, liabilities and equity
as at 31 December 2010 proposed to be transferred to RBS plc over
the period up until 31 December 2013. See "Notes to the pro
forma financial information relating to RBS Holdings N.V." for further
information.

(3)  This represents the value of the assets, liabilities and equity
as at 31 December 2010 assuming the Proposed Transfers had occurred at
that date.

(4) As part of the Proposed Transfers it is assumed that all
intercompany transactions are settled and that the retained business is
refinanced according to its funding needs.


Unaudited pro forma Condensed Consolidated Income Statement for the
year ended 31 December 2010

                          RBS Holdings        Proposed     Pro Forma
                              N.V. (1)   Transfers (2)     Total (3)
                                  EURm            EURm          EURm

Net interest income              1,427             986           441

Fees and commissions
receivable                       1,152           1,019           133
Fees and commissions
payable                            214             113           101
Income from trading
activities                       1,131           1,074            57
Other operating (loss)/
income                            (52)             108         (160)

Non-interest income              2,445           2,314           131

Total income                     3,872           3,300           572
Operating expenses             (3,380)         (3,035)         (345)

Profit before impairment losses    492             265           227

Impairment losses                 (67)              93         (160)

Operating profit before tax        425             358            67

Tax (charge)/credit              (302)           (303)             1

Profit for the year from
continuing operations              123              55            68

Attributable to:
Non-controlling interests          (2)               -           (2)
Shareholders of parent
company                             55              70           125


For notes to this table refer to page 7.


Unaudited pro forma Condensed Consolidated Income Statement for the
year ended 31 December 2009

                         RBS Holdings        Proposed    Pro Forma
                             N.V. (1)   Transfers (2)    Total (3)
                                 EURm            EURm         EURm

Net interest income             1,834           1,546          288

Fees and commissions
receivable                      1,506           1,297          209
Fees and commissions payable    (483)           (455)         (28)
(Loss)/income from trading
activities                      (303)           (634)          331
Other operating loss          (1,157)           (724)        (433)

Non-interest (loss)/income      (437)           (516)           79

Total income                    1,397           1,030          367

Operating expenses            (4,621)         (3,914)        (707)

Loss before impairment
losses                        (3,224)         (2,884)        (340)

Impairment losses             (1,623)         (1,055)        (568)

Operating loss before tax     (4,847)         (3,939)        (908)

Tax credit/(charge)               465             586        (121)

Loss for the year from
continuing operations         (4,382)         (3,353)      (1,029)

Attributable to:
Non-controlling interests         (1)               -          (1)
Shareholders of parent        (4,381)         (3,353)      (1,028)
company

For notes to this table refer to page 7.


Unaudited pro forma Condensed Consolidated Income Statement for the
year ended 31 December 2008

                            RBS Holdings       Proposed    Pro Forma
                                N.V. (1)  Transfers (2)    Total (3)
                                    EURm           EURm         EURm

Net interest income                2,835          2,437          398

Fees and commissions receivable    1,681          1,457          224
Fees and commissions payable       (374)          (457)           83
Loss from trading activities     (7,716)        (5,494)      (2,222)
Other operating loss             (1,763)        (1,816)           53

Non-interest (loss)/income       (8,172)        (6,310)      (1,862)

Total income/(loss)              (5,337)        (3,873)      (1,464)

Operating expenses               (7,844)        (4,956)      (2,888)

Loss before impairment losses   (13,181)        (8,829)      (4,352)

Impairment losses                (2,920)        (1,973)        (947)

Operating loss before tax       (16,101)       (10,802)      (5,299)

Tax credit/(charge)                2,736          2,331          405

Profit/(loss) for the year from
continuing operations           (13,365)        (8,471)      (4,894)

Attributable to:
Non-controlling interests             15              -           15
Shareholders of parent company  (13,380)        (8,471)      (4,909)


Notes:

(1) This financial information for RBS Holdings N.V. has been
extracted from audited financial information contained within the
Annual Report and Accounts of RBS Holdings N.V. published on 29 March
2011.

(2) This represents the income and expenses relating to the Proposed
Transfers for the years ended 31 December 2010, 2009 and 2008. See "Notes
to the pro forma financial information relating to RBS Holdings
N.V." for further information.

(3)  This represents the income and expenses for the years ended 31
December 2010, 2009 and 2008 assuming the Proposed Transfers had
occurred on 1 January of the respective years.


1 Basis of preparation

The pro forma financial information for RBS Holdings N.V. as at 31
December 2010, and for the years ended 31 December 2010, 31 December
2009 and 31 December 2008 respectively, has been prepared in accordance
with International Financial Reporting Standards (IFRS) as issued by
the IASB and adopted by the European Union. The financial information
has been extracted from audited financial information for the year
ended 31 December 2010 contained within the Annual Report and Accounts
of RBS Holdings N.V. published on 29 March 2011 and does not reflect
subsequent events.

The pro forma financial information has been prepared on the following
basis:

* The pro forma financial information has been prepared on the
basis of management's best estimate of the relevant third party assets
and liabilities of RBS N.V. that will be transferred to RBS plc.

* The pro forma condensed consolidated statement of financial
position of RBS Holdings N.V. as at 31 December 2010 is presented to
show the effect of the Proposed Transfers as if the Proposed Transfers
had occurred on 31 December 2010.

* The pro forma condensed consolidated income statements of RBS
Holdings N.V. for the years ended 31 December 2010, 2009 and 2008
respectively, are presented to show the effect of the Proposed
Transfers as if the Proposed Transfers had occurred on 1 January of the
respective years.

* Assets and liabilities to be transferred are presented based on
their carrying values determined under IFRS. The allocation of equity
was assessed on a global basis to reflect the expected level of capital
support required by the transferring and retained businesses.
Pre-existing intra-group funding was treated as settled upon transfer
with new funding allocated as needed to reflect the financing needs of
the transferring and retained businesses. Certain modifications were
applied where, in the opinion of management, material non-recurring
profit and loss items could be allocated more reliably on an individual
basis.

* The Proposed Transfers are subject, amongst other matters, to
regulatory and other approvals, further tax and other analysis in
respect of the assets and liabilities to be transferred and employee
consultation procedures, any of which may significantly change the pro
forma information from that presented.

The same accounting policies were followed in the pro forma financial
information as were applied in the preparation of RBS Holdings N.V.
financial statements for the year ended 31 December 2010.


2 Businesses to be transferred as part of the Proposed Transfers

RBS N.V.'s businesses include the following product areas: Equities &
Structured Retail Products, Emerging Markets, Lending, Global
Transaction Services (GTS), and Short Term Markets & Financing (STMF).
The Proposed Transfers comprise a number of subsidiary companies and
specific product portfolios together with associated hedging. RBS N.V.
also currently holds directly and indirectly certain other assets which
are owned by RBSG jointly with the Dutch State and Santander (the
"Consortium Shared Assets"); these are part of the retained businesses.

It is expected that the Proposed Transfers will be implemented on a
phased basis over a period ending 31 December 2013. A large part of the
Proposed Transfers (including the transfers of certain securities
issued by RBS N.V.) is expected to have taken place by the end of 2012.
This will be subject, amongst other matters, to regulatory and other
approvals, further tax and other analysis in respect of the assets and
liabilities to be transferred and employee consultation procedures.

It is not certain whether such transfers (or any of them) will be
effected at the value used for the pro forma financial information. No
person should place any reliance on the pro forma financial information
in connection with making an investment decision or for any other
purpose and should be aware that changes to the current proposals
(including, without limitation, to the assets and liabilities to be
transferred or retained, the eventual manner in which such assets and
liabilities are proposed to be transferred and to the timing pursuant
to which they are proposed to be transferred) may be made if required,
or if determined by RBS N.V. or RBS plc (in their absolute discretion)
to be desirable for commercial or other reasons. Accordingly, nothing
in this pro forma financial information should be taken as (or is) a
representation that any of the assets and liabilities referred to will
be transferred or retained, whether in a manner consistent with the
figures contained in this pro forma financial information, in
accordance with the timing set out above, or at all. For the avoidance
of doubt, this pro forma financial information has been prepared and
circulated solely for information purposes and does not constitute an
offer to any person.


3 Overview of RBS Holdings N.V. after the Proposed Transfers

For legal, tax and other reasons, there are expected to be certain
operations, assets and liabilities in RBS N.V. which will not be
transferred to RBS plc. RBSG is committed to providing the necessary
support to ensure that RBS N.V. continues to meet its commitments
during and after the Proposed Transfers. Following completion of the
Proposed Transfers, RBS N.V. will continue to be authorised and
regulated by DNB.

                    This information is provided by RNS
          The company news service from the London Stock Exchange

END

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