Page 18 - RBS – ABN takeover

No 5 in the United States and No 5 in Asia Pacific, while it will remain the second

biggest European bank, behind HSBC.

However, for corporate and institutional banking, RBS will be the biggest bank in

Europe with far better profit margins than those available from high street

banking. Then again, this part of ABN, the operations that deal with private

equity, hedge funds, other banks and the treasury departments of companies

with an 82% cost-income ratio, had been most affected by the sub-prime

catastrophe.

ABN's Global Clients business will also pass over to RBS, which will allow it to

lend money to and take deposits from sizeable international companies and

financial houses that operate on more than one continent. In addition RBS will

acquire ABN's International Cash Management system, a complex payment

system that will allow it to bank for multinational firms.

Finally, RBS will take ABN's businesses in the Asia-Pacific where previously it

had very little presence. This part of the deal will bring with it banking licences in

16 countries such as China, Singapore and India where it is notoriously difficult

for non-native banks to win licences. It is likely that RBS will set up a global

operations centre in Amsterdam, but the wholesale banking will continue to be

run from London.

Corporate markets have been an increasingly important part of RBS. For the past

two years, it has outstripped the profits contribution of RBS's retail bank, and in