FORM 6-K

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Report of Foreign Private Issuer

 

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

For 28 August 2015

 

 

 

RBS Holdings N.V.

 

Gustav Mahlerlaan 350

1082 ME Amsterdam

PO BOX 12925

The Netherlands

 

(Address of principal executive offices)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F  X                                              Form 40-F     

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):__

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):__

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes                                                                 No  X  

 

If "Yes" is marked, indicate below the file number assigned to

the registrant in connection with Rule 12g3-2(b): 82-             

 

 

RBS Holdings N.V.

 

In the Interim results and unless specified otherwise, the terms 'company' or 'RBS Holdings' mean RBS Holdings N.V. which is the parent company of The Royal Bank of Scotland N.V. consolidated group of companies and associated companies (RBS N.V.). ‘RBSH Group’ or the ‘Group’ is the parent company and its consolidated subsidiaries and associated companies.

 

The Royal Bank of Scotland Group plc (RBSG) is the ultimate holding company of RBSH Group. RBS Group refers to RBSG and its consolidated subsidiaries and associated companies. RBS plc refers to The Royal Bank of Scotland plc.

 

The terms 'Consortium' and 'Consortium Members' refer to RBSG, Stichting Administratiekantoor Beheer Financiële Instellingen (the Dutch State, successor to Fortis) and Banco Santander S.A. (Santander) who jointly acquired RBS Holdings on 17 October 2007 through RFS Holdings B.V. (RFS Holdings).

 

 

 

 

 

 

 

 

The Managing Board declares that, to the best of its knowledge, the interim financial statements give a true and fair view, in all material respects, of the financial position and the results of RBS Holdings N.V. as at 30 June 2015 and for the six month period then ended.

 

 

 

 

Amsterdam

27 August 2015

 

 

Idzard van Eeghen

Acting Chairman of the Managing Board

 

 

Cornelis Visscher

Chief Financial Officer

 

 

General information

The Group offers a range of banking products and financial services, principally in Europe and Asia.

 

In 2007, RFS Holdings B.V. (RFS Holdings), which was jointly owned by RBSG, Fortis (succeeded by the Dutch State in 2008) and Banco Santander S.A. (together the Consortium Members) completed the acquisition of RBS Holdings N.V..

 

RBS Holdings has one direct subsidiary, RBS N.V., a fully operational bank within RBSH Group. RBS N.V. is independently rated and regulated. Effective from 4 November 2014 the Dutch Central Bank was replaced as the main regulator by the European Central Bank (ECB) in conjunction with the Dutch Central Bank. Certain assets within RBS N.V. continue to be owned by the Dutch State or shared by the Consortium Members.

 

RBSG's shareholding in RFS Holdings is currently 97.72%. RFS Holdings is controlled by RBSG, which is incorporated in the UK and registered at 36 St Andrew Square, Edinburgh, Scotland. RBSG is the ultimate parent company of RBSH Group. The consolidated financial statements of RBSH Group are included in the consolidated financial statements of RBS Group.

 

Transfers of a substantial part of the business activities of RBS N.V. to The Royal Bank of Scotland plc (RBS plc)

Following the announcements in April 2011 by the Boards of RBSG, RBS plc, RBS Holdings and RBS N.V., a substantial part of the business activities of RBS N.V. had been successfully transferred to RBS plc by the end of 2012, with further transfers in 2013 and 2014. There have been no transfers in 2015, however the focus continues to be on further de-risking the balance sheet.

 

 

Operating (loss)/profit

Operating loss before tax was €53 million compared with a profit of €61 million in the first half of 2014. The decline was due to a significant reduction in income, down €116 million, and impairment losses of €96 million compared with impairment releases of €17 million in H1 2014, which was partially offset by a decrease in operating expenses down €115 million.

 

Total income

Total income fell by €116 million, 45%, to €139 million from €255 million in the first half of 2014.

 

Net interest income  

Net interest income fell by €117 million to a loss of €11 million, compared with income of €106 million in the first half of 2014, reflecting a reduction in interest receivable following the repayment of a loan to a fellow subsidiary in December 2014, the sale of a substantial portion of the legacy debt securities portfolio in Treasury and the overall run-down of banking book assets in CIB and RCR outpacing the reduction in liabilities.

 

Non-interest income

Non-interest income remained stable at €150 million. Income from trading activities was €5 million compared with a loss of €42 million in H1 2014, primarily due to improved results in credit and interest rate trading. Net fees and commissions fell by €15 million, 65%, to €8 million and other operating income declined by €31 million, 18%, to €137 million primarily reflecting a loss on disposal of securities of €95 million (30 June 2014 gain €7 million) in Treasury partially offset by an increase in income from associates.

 

Operating expenses

Operating expenses fell by €115 million, 55%, to €96 million from €211 million in the first half of 2014. Staff expenses decreased by €6 million, 15%, to €34 million resulting from planned business reduction in CIB and run off in RCR. Other administrative expenses declined by €113 million, 70%, to €49 million largely driven by a non-repeat of a litigation settlement recorded in H1 2014. 

 

Impairment (losses)/releases

Impairment losses were €96 million compared with releases of €17 million in the first half of 2014. The losses in the first half of 2015 were primarily driven by a single exposure whereas the releases in the first half of 2014 reflected the release of latent provisions plus individual case releases.

 

Balance sheet

Total assets decreased by €5.1 billion, 22%, to €18.5 billion, primarily due to planned reductions in CIB and run off in RCR. The major movements were:

 

 

 

Capital

Capital ratios at 30 June 2015 were 17.0% (Common Equity Tier 1), 24.6% (Tier 1) and 35.0% (Total) compared with 16.2% (Common Equity Tier 1), 24.5% (Tier 1) and 33.9% (Total) at 31 December 2014. Risk-weighted assets are set out below.

 

  

 

Condensed consolidated statement of comprehensive income for the half year ended 30 June 2015

 

 

Note:

 

 

 

 

 

Notes:

 

 

 

 

1. Basis of preparation

The Group’s condensed consolidated interim financial statements have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’. They should be read in conjunction with the audited financial statements published in the 2014 Annual Report and Accounts which were prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (IASB) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) of the IASB, as adopted by the European Union (EU) (together IFRS).

 

The condensed consolidated interim financial statements are unaudited. In the opinion of management, all relevant disclosures necessary for an understanding of the changes in the consolidated financial position and performance of the Group since the end of the last annual reporting period have been made.

 

Going concern

A summary of the risk factors which could materially affect the Group’s future results are described on pages 28 and 29.

 

Having reviewed the Group’s forecasts and projections and considered the interim results of the RBS Group for the half year ended 30 June 2015, approved on 29 July 2015, which were prepared on a going concern basis, together with evidence that the RBS Group will continue to provide sufficient resources to the Group, the directors have a reasonable expectation that the Group will continue in operational existence for the foreseeable future. Accordingly, the interim financial statements for the half year ended 30 June 2015 have been prepared on a going concern basis.

 

2. Accounting policies

There have been no significant changes to the Group’s principal accounting policies as set out on pages 91 to 97 of the 2014 Annual Report and Accounts. Amendments to IFRSs effective for 2015 have not had a material effect on the results for the half year ended 30 June 2015.

 

Critical accounting policies and key sources of estimation uncertainty

The reported results of the Group are sensitive to the accounting policies, assumptions and estimates that underlie the preparation of its financial statements. The judgements and assumptions that are considered to be the most important to the portrayal of the Group’s financial condition are those relating to provisions for liabilities, loan impairment provisions and fair value of financial instruments. These critical accounting policies and judgments are described on pages 97 to 99 of the 2014 Annual Report and Accounts.

 

Notes  

 

3. Impairment provisions

Impairment losses/(releases) charged to the income statement comprise:

 

The balance sheet loan impairment provisions at 30 June 2015 and 31 December 2014 were €114 million:

 

There are no provisions in respect of loans and advances to banks.

 

4. Credit protection arrangements

The Group entered into two agreements with RBS plc under which it bought credit protection over the exposures held by the Group that were subject to RBS Group’s Asset Protection Scheme (APS) agreement with HM Treasury (HMT). These agreements cover 100% of losses on these assets. One agreement provides protection over a portfolio that includes significant exposure in the form of derivatives; the other covers assets that are measured at amortised cost. The former agreement is accounted for as a credit derivative. The second agreement meets the definition of a financial guarantee contract and is accounted for as such. RBS plc exited the APS effective 18 October 2012. The agreements are not impacted by RBS plc’s exit from the APS. As at 30 June 2015, all derivative exposures have been exited and there has been no change to the financial guarantee contract.

 

With effect from 1 January 2013, the Managing Board of the Group agreed with RBS plc to reduce the number of covered assets included in the agreements as a result of the progress made with the transfers to RBS plc during 2011 and 2012. Unamortised fees relating to the assets previously covered will be reimbursed by RBS plc. At 30 June 2015, €1.0 billion of assets were covered under the agreement (31 December 2014 - €1.0 billion), with an average remaining maturity of three years. At 30 June 2015, the carrying value of the prepaid fee for the financial guarantee contract was €5 million (31 December 2014 - €9 million).

 

 

5. Taxation

The actual tax credit/(charge) differs from the expected tax credit/(charge) computed by applying the standard Dutch corporation tax rate of 25% as follows:

 

 

6. Segmental analysis

RBSH Group’s reportable segments are as follows:

 

 

 

 

 

7. Financial instruments: Classification

The following tables analyse the Group’s financial assets and liabilities in accordance with the categories of financial instruments in IAS 39 with assets and liabilities outside the scope of IAS 39 shown separately.

Notes:

 

 

 

 

7. Financial instruments: Classification (continued) 

 

 

 

7. Financial instruments (continued) 

 

Financial instruments carried at fair value - valuation hierarchy

Disclosures relating to the control environment, valuation techniques, inputs to valuation models and discussion on level 3 sensitivities related to all financial instruments measured at fair value on a recurring basis are included in the 2014 Annual Report and Accounts. There have been no material changes to valuation or levelling approaches in the half year to 30 June 2015.

 

The following tables show financial instruments carried at fair value on the Group’s balance sheet by valuation hierarchy - level 1, level 2 and level 3.

 

Notes:

 

 

7. Financial instruments (continued) 

 

Fair value of financial instruments not carried at fair value

The following table shows the carrying value and fair value of financial instruments carried at amortised cost on the balance sheet.

 

The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Quoted market values are used where available; otherwise, fair values have been estimated based on discounted expected future cash flows and other valuation techniques. These techniques involve uncertainties and require assumptions and judgments covering prepayments, credit risk and discount rates. Furthermore, there is a wide range of potential valuation techniques. Changes in these assumptions could significantly affect estimated fair values. The fair values reported would not necessarily be realised in an immediate sale or settlement.

 

For the following short-term financial instruments, fair value approximates to carrying value: cash and balances at central banks, items in the course of collection from and transmission to other banks, settlement balances and demand deposits. These are excluded from the table above.

 

Additional contingent liabilities arise in the normal course of the Group’s business. It is not anticipated that any material loss will arise from these transactions.

 

 

9. Litigation, investigations and reviews

 

Litigation, arbitration, investigations and reviews

RBSH Group and other members of RBS Group are party to legal proceedings and the subject of investigation and other regulatory and governmental action in the Netherlands, the United Kingdom, the European Union, the United States and other jurisdictions.

 

RBSH Group recognises a provision for a liability in relation to these matters when it is probable that an outflow of economic benefits will be required to settle an obligation resulting from past events, and a reliable estimate can be made of the amount of the obligation. While the outcome of the legal proceedings, investigations, and regulatory and governmental matters in which RBSH Group is involved is inherently uncertain, the directors believe that, based on the information available to them, appropriate provisions have been made in respect of legal proceedings, investigations, and regulatory and governmental matters as at 30 June 2015. The future outflow of resources in respect of any matter may ultimately prove to be substantially greater than or less than the aggregate provision that RBSH Group has recognised.

 

In many proceedings and investigations, it is not possible to determine whether any loss is probable or to estimate the amount of any loss, either as a direct consequence of the relevant proceedings and investigations or as a result of adverse impacts or restrictions on RBS Group’s reputation, businesses and operations. Numerous legal and factual issues may need to be resolved, including through potentially lengthy discovery and document production exercises and determination of important factual matters, and by addressing novel or unsettled legal questions relevant to the proceedings in question, before a liability can reasonably be estimated for any claim. RBSH Group cannot predict if, how, or when such claims will be resolved or what the eventual settlement, damages, fine, penalty or other relief, if any, may be, particularly for claims that are at an early stage in their development or where claimants seek substantial or indeterminate damages.

 

There are also situations where RBSH Group may enter into a settlement agreement. This may occur in order to avoid the expense, management distraction or reputational implications of continuing to contest liability, or in order to take account of the risks inherent in defending claims or investigations even for those matters for which RBSH Group believes it has credible defences and should prevail on the merits. The uncertainties inherent in all such matters affect the amount and timing of any potential outflows for both matters with respect to which provisions have been established and other contingent liabilities.

 

The future outflow of resources in respect of any matter may ultimately prove to be substantially greater than or less than the aggregate provision that RBSH Group has recognised. Where (and as far as) it is indicated that liability cannot be reasonably estimated, no provision has been recognised.

 

RBSH Group may not be directly involved in all of the following litigation, arbitration, investigations and reviews but due to the potential implications to RBS Group of such litigation, arbitration, investigations and reviews, if a final outcome is adverse to RBS Group it may also have an adverse effect on RBSH Group. Other than those discussed below, no member of RBSH Group is or has been involved in governmental, legal or regulatory proceedings (including those which are pending or threatened) that are expected to be material individually or in aggregate. RBS Group expects that in future periods additional provisions, settlement amounts, and customer redress payments will be necessary, in amounts that are expected to be material in some instances.

 

 

 

9. Litigation, investigations and reviews (continued) 

 

Litigation

 

Madoff

In December 2010, Irving Picard, as trustee for the bankruptcy estates of Bernard L. Madoff and Bernard L. Madoff Investment Securities LLC, filed a clawback claim against RBS N.V. in New York bankruptcy court. In the operative complaint, filed in August 2012, the trustee seeks to recover US$75.8 million in redemptions that RBS N.V. allegedly received from certain Madoff feeder funds and US$162.1 million that RBS N.V. allegedly received from its swap counterparties at a time when RBS N.V. allegedly ‘knew or should have known of Madoff’s possible fraud.’ The Trustee alleges that those transfers were preferences or fraudulent conveyances under the US bankruptcy code and New York law and he asserts the purported right to claw them back for the benefit of Madoff’s estate. A further claim, for US$21.8 million, was filed in October 2011. This matter is subject to pre-discovery motions to dismiss the claims against RBS N.V..

 

London Interbank Offered Rate (LIBOR)

Certain members of RBS Group have been named as defendants in a number of class actions and individual claims filed in the US with respect to the setting of LIBOR and certain other benchmark interest rates. The complaints are substantially similar and allege that certain members of RBS Group and other panel banks individually and collectively violated various federal laws, including the US commodities and antitrust laws, and state statutory and common law, as well as contracts, by manipulating LIBOR and prices of LIBOR-based derivatives in various markets through various means.

 

Most of the USD LIBOR-related actions in which RBS Group companies are defendants, including all purported class actions relating to USD LIBOR, have been transferred to a coordinated proceeding in the United States District Court for the Southern District of New York. In the coordinated proceeding, consolidated class action complaints were filed on behalf of (1) exchange-based purchaser plaintiffs, (2) over-the-counter purchaser plaintiffs, and (3) corporate debt purchaser plaintiffs. In orders dated 29 March 2013 and 23 June 2014, the Court dismissed plaintiffs' antitrust claims and claims under RICO (Racketeer Influenced and Corrupt Organizations Act), but declined to dismiss (a) certain Commodities Exchange Act claims on behalf of persons who transacted in Eurodollar futures contracts and options on futures contracts on the Chicago Mercantile Exchange (on the theory that defendants' alleged persistent suppression of USD LIBOR caused loss to plaintiffs), and (b) certain contract and unjust enrichment claims on behalf of over-the-counter purchaser plaintiffs who transacted directly with a defendant.

 

The Court’s dismissal of plaintiffs’ antitrust claims is currently on appeal to the United States Court of Appeals for the Second Circuit. Over 35 other USD LIBOR-related actions involving RBS Group, including purported class actions on behalf of lenders and mortgage borrowers, are subject to motions to dismiss that are being litigated. Discovery has been stayed in all cases in the coordinated proceeding pending further order from the Court.

 

Certain members of RBS Group have also been named as defendants in class actions relating to (i) JPY LIBOR and Euroyen TIBOR, (ii) Euribor, (iii) Swiss Franc LIBOR and (iv) Pound sterling LIBOR, all of which are pending in the United States District Court for the Southern District of New York. On 28 March 2014, the Court in the action relating to Euroyen TIBOR futures contracts dismissed the plaintiffs’ antitrust claims, but refused to dismiss their claims under the Commodity Exchange Act for price manipulation.

 

Details of LIBOR investigations and their outcomes affecting RBS Group are set out under ‘Investigations and reviews’ on page 22.