Royal Bank Of Scotland

HISTORY AND INTRODUCTION

The Royal Bank of Scotland (RBS) Group formally re-branded ABN AMRO branches in
Pakistan on Friday, August 1, 2008.

Pakistan is among the first Asian markets where ABN AMRO has been re-branded as
RBS effective from August 1 as approved by local regulators. ABN AMRO Bank
(Pakistan) Ltd will now be officially renamed as The Royal Bank of Scotland Ltd. This
follows the successful global acquisition of ABN AMRO in October 2007 by an RBS-led
consortium.

A press statement of the bank said presently RBS was the second largest financial
services group by profit, with an ‘AA-’ credit rating with total assets of 1,900.5 billion
pound sterling as of December 31, 2007.

The Royal Bank of Scotland Group has grown from small beginnings nearly 300 years
ago to become the second largest financial services group by profit in the world. With an
AA credit rating, RBS group has more than 40 million customers worldwide and total
assets, as of 31 December 2007, of €2.4billion. Their brands operate around the globe and
down your street to provide banking services for individuals, businesses and institutions.

The Royal Bank of Scotland Group's Business and Commercial brands provide a range of
products and services for small businesses, as well as providing a network of branch-
based business advisers.
OVERVIEW OF RBS
Products & Services:
RBS Royal Preferred Banking believes in premier service delivery and going an extra
mile to bring superior standards that our clients can truly appreciate. The RBS Royal
Preferred Banking brand goes beyond financial solutions and aims to offer clients a
privileged lifestyle which they can truly value and associate with.

1) Deposit Products:
A full menu of current, savings accounts and terms deposits in all major currencies with
extensive cash withdrawal limits, attractive returns with high liquidity and a host of
associated privileges.
2) Loan Products:
A range of convenient and easily available Loan Products to cater to all unexpected
moments give you the cash to spend when you need it. Whether it is a personal loan,
financing for your home or a loan to pay off your credit card bills, they provide with all
the financial assistance.

3) Credit Cards:
Credit Cards come with countless privileges, rewards and a wealth of ideas that elevates
your every experience.Make your choice today to experience unprecedented
dependability designed to compliment your lifestyle.

4) Insurance Products:
RBS provides a wide selection of insurance plans that helps you save and at the same
time offers protection on your assets, income and loved ones. The customer can choose
from any of their customized plan that fit the budget and their life stage needs.

Services of RBS:

At RBS, they endeavor to make your banking experience memorable and enjoyable. It is
our unique commitment to absolute service excellence that drives them forward. Their
global strength enables them to provide their customers a complete range of financial
products and expertise.

• Debit Card
• ATM Network
• Non-Stop Banking Centre
• Drop Box Facility
• E-statements
• Lockers

DEPOSITS AND INVESTMENTS

Finding the right vehicle for surplus funds is a key decision for businesses of every size.
By combining a broad product offering and the support of a dedicated relationship
manager, RBS aims to help you reach the right outcome.
RBS listens to your immediate and strategic investment aims, and then match them to an
appropriate deposit or investment solution. So your organization will gain lasting
commercial benefits, whether its priority is accessing funds instantly, maximizing long-
term returns, or managing client funds.
There are three types of deposit accounts:

• Saving accounts
 • Term accounts
• Current accounts

Savings and Term Deposit Accounts:

the Deposit products are structured in a way that the Savings and Term Deposits from
RBS’s Clients go into a pool of funds maintained by the Bank. As the Fund Manager
invests these funds into investments and the resulting profit is distributed between the
Bank and Depositors according to pre-defined ratios and weightings. In some cases, the
Bank may also invest its funds in the pool and become a partner with the Depositors
within that pool.
Current Accounts:
A Current Account is operated as the funds from the Depositors are treated as a loan for
the Bank and no profit of any kind is payable to the Depositors but the principle is
guaranteed and payable to the client on demand.

For example, assume the bank has five categories of Depositors that hold the following
account types: (i) Savings (ii) 1 Month Term Deposit (iii) 3 Months Term Deposit (IV) 6
Months Term Deposit (v) 1 Year Term Deposit.

The Bank receives a total of Rs. 20,000 from these five categories of Depositors and each
category is assigned a specific weight age:

Category Deposit (Rs.) Weight age

Savings 3,000 0.1
1 Month 1,000 0.3
3 Months 3,000 0.5
6 Months 6,000 0.6
1 year 7,000 0.7
Total 20,000

The concept of weightage: The concept of weight ages is being used by Banks because
they face the challenge of distributing profits among a wide variety of Depositors with
varying tenures and amounts. Depositors continually close their accounts or decrease
their balances with the Bank. In order to tackle this, the Bank assigns a weightage to a
specific deposit based on its amount and tenure so as to create a balance in profit returns
to these various deposit categories.

Managing daily liquidity (short-time finances):

At The Royal Bank of Scotland, they recognize that there are conflicting pressures on
businesses. Forecasting accurate cash flows can be problematic, so it is imperative that
funds can be accessed quickly if required. Yet this need has to be balanced against the
importance of maximizing returns.
As a result, RBS offers a range of instant access accounts. Choose from any of these and
your business will be able to access its funds immediately and earn interest at the same
time.
Managing longer-term finance:
Manage cash flow with a fixed-term investment that will guarantee returns and
potentially earn higher rates of interest.
Perhaps your business is accumulating cash to fund an expansion programme or asset
purchase, or it could have received a large cash sum. Whatever the precise circumstances,
if you are thinking strategically about cash investment, The Royal Bank of Scotland is the
ideal partner.
They have a variety of strategic sterling and currency cash investment products. All of
these draw on their knowledge of UK and international markets and all offer a tailored
solution that will reflect your organization’s cash flow, liquidity needs, and investment
aims.
Managing client funds:
One can make managing clients' funds easier with the third party deposit accounts - and
provide an even better service to your clients.
INTEREST
Interest can be paid monthly, quarterly, half-yearly or annually and client listings can be
given different interest rate structures.
Interest is calculated automatically by CMS and payments can be gross or net of tax
according to each client's tax position.
Interest rate depends on different accounts.
• Saving accounts:
Classic a/c: 7.25% monthly
Anchor a/c: 5% monthly
Access a/c: 5% monthly
• Current accounts:
Current accounts are non-interest accounts.
• Term-deposit:
Interest rate varies from 11.5% to 16%.

Loans

Loans are a flexible method of financing short-term capital needs, often without the need
for supporting collateral or restrictive covenants.Loans are available to finance inventory,
receivables and other requirements, in local and foreign currencies.

• Accounts receivable financing

• Accounts payable financing
• Inventory financing
• General purpose secured loans
 • Term loans
• Overdrafts

1) Business term loans:

Every business is different and has different financial needs. Their Business Term Loan is
designed to suit those needs. Suitable for any borrowing amount, the Business Term Loan
can be used for virtually any purpose.

In addition, a range of flexible options allow you to tailor your loan to fit your unique
circumstances.These include:

• Variable or fixed rates: Choose a fixed rate to enjoy the peace of mind of fixed
monthly repayments. Alternatively, opt for a variable rate linked to the Bank’s
base rate, which can of course rise or fall. (Please note that an early repayment
charge may apply in the event that a fixed loan is repaid early during the fixed
period.)
• A range of repayment holiday options: take advantage of a payment holiday at
the start or even during your loan to boost cash flow.
• Choice of repayment styles and frequencies: RBS offers a range of repayment
styles, such as capital and interest, capital only or interest only basis. In addition,
you can choose the frequency in which you make repayments including monthly,
quarterly, half yearly and yearly
• Staged drawdown: save on interest costs and benefit from lower initial payments.
• Make lump sum repayments: use surplus cash to save interest costs and benefit
your business.

2) Mortygages loan:
Whether you are looking to expand your premises, build new premises or fund a property
purchase, a commercial mortgage from The Royal Bank of Scotland can back you all the
way

Commercial mortgage benefits:

• Fast decision-making – RBS’s streamlined application and approval process

means you can act quickly and decisively
• Interest rate options - choose from fixed and variable interest rates
• Up to 25 year repayment terms - giving you the flexibility you need
• £26,000 minimum loan amount - and no maximum loan amount
• Borrow 70% of the purchase price - or of the open market value, whichever is
lower
• Pay interest on what you need – the staged drawdown option allows you to
withdraw funds as and when you need them, reducing the amount of interest you
pay
 • Flexible repayment options - help your cash flow with a capital repayment
holiday or capital and interest repayment holiday option. Or make lump sum
reductions to save on the interest you pay. Lump sum repayments are not
permitted where the loan is on a fixed interest rate basis. Interest will continue to
accrue during these periods, and will increase your repayments after this period. If
early repayment of a fixed interest rate loan is made, you may incur a substantial
charge.

3) Personal loan:

• Online rate- 8.9% APR typical for online loans of £7,500 to £12,450
• Ten year loans- if you borrow over £2,500 for home improvements
• Other loan amounts available at alternative rates
• Available to existing current account customers only

4) Graduate loans:

Borrow from £1000 to £15,000

No repayments for up to 12 months

In work or got a firm job offer, you can defer your repayments for up to nine months. You
can defer your repayments for up to 12 months if you're travelling - as long as you have a
firm job offer to return to.You'll be charged interest during the deferment period. This
interest is then repaid as part of the monthly repayments.

5) Fixed rate loans:

a) Sterling Fixed Rate Loan:

• Repayment terms - from one year to 25 years

• Fix your rate - you can fix your interest rate from one year to 10 years
• Flexible - the chance to revise your interest rate options after your fixed rate
period expires. There are also various repayment options
• £26,000 minimum loan
• Payment holiday - take a break from making capital repayments at the start of
your loan, although interest will accrue during this period

b) RBS business loan:

Reduced Loan rates to help small businesses.

All business customers can benefit from:
• Repayment terms of up to 10 years
 • No arrangement or security fees to set up your loan
• Fixed monthly repayments for easy budgeting
• Support and advice throughout the loan term from your dedicated Business
Manager

BORROWINGS
Your home or property may be repossessed if you do not
keep up repayments on your mortgage.Different sources of finance carry different
obligations, responsibilities and opportunities for profitable business. The differences
have to be understood to allow you to make an informed choice.
Banks offer a range of financing options, including the most common overdrafts and term
loans. They can provide any sum, small or large you have to repay the loan and pay
interest on the outstanding balance. A bank may look to the owner to provide security for
the lending.

You want to... Interest rate Minimum Consider using a...

amount
Know exactly how much Fixed £1,000 Fixed rate loan
you'll pay and make cash flow
management easier
Manage everyday cash flow Variable None Business Overdraft
Have flexible finance options Variable or None Business Term Loan
to suit your particular fixed
business circumstances
Buy or build new business Variable or £26,000 Commercial Mortgage
premises - or improve fixed
existing premises
Fund your work in private Variable or £5,000 Professional Practice Loan
practice fixed
Borrow money for a viable Variable or £5,000 (SubjectSmall Firms Loan Guarantee
business enterprise - when fixed to Scheme
you don't have collateral to eligibility
offer in security criteria)
Acquire and use assets Various options, details Asset finance
without having to buy them available on request
outright
Get instant payment for N/A Invoice finance
invoices you've issued to your
customers
FINANCIAL MANAGEMENT

Final project