Rbs Global Strategy - DOC

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					Royal Bank of Scotland                                           7th August 2009
Booking Reference: 21851081
Duration: 00:36:51

   Stephen Hester
   Guy Whittaker

Operator: Good morning ladies and gentlemen today’s, conference call will be
     hosted by Steven Hester Group Chief Executive of RBS please go ahead

Stephen Hester:     Good morning everyone; Stephen here; I'm also here with
     Guy Whittaker, our Finance Director. Let me start the call by apologising
     for the huge weighty tome that has landed on your screens or on your
     desks. I think we have set a new benchmark for disclosure today among
     UK banks; of course it will take people sometime to absorb it, but we
     mean the new RBS to be characterised among other things for
     transparency and straight talking and I hope we have at least delivered
     that today.

       In a second I will hand it over to Guy to talk to you through some of the
       results and then come back and talk through the strategy and the other
       things we’ve been up to, but let me just say what I hope people would
       take-away overall, from what we have put out today is two things.

       The first is that we are positive; we are optimistic for the future of RBS; we
       believe that we can rebuild the bank; that we conserve our 40 million
       customers well during that process; that we can get the risk positions that
       nearly knocked us over back under control and the bank into stand alone
       health; and we can rebuild shareholder value for all shareholders so that
       our Government support can be sold down at a profit to taxpayers. All of
       that we have taken comfort in through what we’ve found on our actions in
       the first six months.

       However, there will be no miracle cure; there is a significant danger that
       people get carried away with too much enthusiasm too quickly. There are

      a couple of years, at least, of heavy lifting both for the world economy and
      for RBS and people need to understand that, and understand that we
      have many things to work out of. While we are positive about the end
      result the journey will be still be a arduous one; this will be a marathon and
      not a sprint. Let me come back to some of those themes in a second and
      first perhaps ask Guy just to highlight some of the financials for the first

Guy Whittaker: Thank you very much Stephen and good morning to everybody.
     The financial highlights this morning showed the Group made a profit
     before tax of £15 million in the first half of the year. After paying shares
     owed to minority interests and preference shareholders we’ve recorded
     made £1 billion loss attributable to the RBS shareholders. The first time
     we’ve showed our results in the new Group structure, reflecting both its
     core and non–core divisions; within the core divisions we saw strong
     income growth, up 25%, £17.8 billion, led by our Global Banking and
     Markets Divisions. This was augmented by good cost control generating
     profit before impairment losses of £8.5 billion. We recorded impairment
     charges of £2.2 billion and operating profit from our core businesses of
     £6.3 billion, of which 4.9 was in Global Banking and Markets; £0.5 billion
     in Global Transaction Services; £0.5 billion from our Retail and
     Commercial Banking businesses around the world; and £200 million from
     our Insurance operations.

      Our non-core divisions managed for risk mitigation and wind down
      recorded a loss of £9.5 half billion losing £3 billion on the income line with
      write-downs, increased provisions against our monoline and credit
      portfolio exposures, as well as recording a £5.3 billion impairment charge
      against loans dedicated to the non-core divisions. As a result of that the
      Group had an operating loss from its business operations of £3.3 billion.
      We benefited from gains on the redemption of our own debt, as well as the
      disposals of the Bank of China stake and [being] a Director to record the
      profit before tax of £15 million that I mentioned earlier.

      We made very good progress in the first half on balance sheet
      management and balance sheet reduction of third party assets coming
      down 11% since the year-end to just over £1.08 trillion; they are now down
      23% or £600 billion from the peak in 2007. Our loan-to-deposit ratio
      improved from 152 to 144%, helping close the funding gap by over
      £50 billion. The remaining average life on our wholesale funding we did

      over one year maturity, grew from 45 to 47% and we have a stock of liquid
      assets on the balance sheet now of over £120 billion.

      Risk rated assets came down about 5%, principally on foreign exchange
      movement; our core Tier 1 rose from 5.9 at the end of 2008 to 6.4% pre
      the Asset Protection Scheme. Asset Protection Scheme, when finalised
      is expected to add approximately, or in excess of five percentage points to
      that number; and with that I’ll hand back to Stephen.

Stephen Hester:    Thank you very much Guy; along with the numbers we put
     out an unprecedented level not only of disclosure, but of targets against
     our new strategy this morning. You can think of our strategy - and it is of
     cause that strategy that will rebuild us to stand alone health; rebuild
     shareholder value and allow the taxpayer to get out at a profit.

      It basically has three interlocking pieces: the risks and the balance sheet
      excess that nearly brought RBS down is largely being taken care of
      through establishment of our non-core division, which over the next five
      years will bring down our risk on our balance sheet. We have already
      brought the balance sheet down by in excess of £300 billion; there is
      another 200 or so to go, but it is the more difficult stuff that will take some
      time - a very important element of strategy for risk reduction.

      Our core businesses, every single one of them have a restructuring plan;
      to make them better; to serve customers better; to restore profitability and
      to drive the share value upwards for the bank. The third element of our
      strategy is a series of cross-cutting management disciplines to make sure
      that the new RBS is fundamentally different from the old in culture, in risk,
      in focus on customers and in accountability. On that note, of course, as I
      say, we‘ve put out a whole series of performance targets against which we
      can be judged in the coming periods. That’s what we’ve done today; we
      are busy in implementing our plans.

      I’m delighted to have already completed the full renewal of my Executive
      Committee; all nine members of the Executive Committee are now new to
      post. We announced this morning our new Finance Director, a very
      talented and experienced man, Bruce Van Saun, on whom you’ll see a
      separate press release. I should also pay tribute to Guy – who is here
      with me – who will step down at the end of September, who has been

       really fantastic in the way he’s partnered me in making the changes we’ve
       made in the last nine months.

       We’ve got that done around our business; Guy has talked about the
       balance sheet coming down; we’ve made big strides in our necessary
       efficiency programme and throughout that we are serving our customers
       well. In no major business around the world have our customer numbers
       fallen in the First Half, and that tells you that despite the kicking we’ve
       taken, despite the many disappointments of our staff, our staff are out
       there serving customers, whether it be making loans or doing the other
       things we do for them and we’re providing something that our customers
       need. That is the foundation on which we are rebuilding this bank. We’re
       positive about the future, but cautious about the things that we have to do

       With that I’ll be very happy to take any of your questions.

Operator: Ladies and gentlemen, if you would like to ask a question please
     press the * key followed by the digit 1 on your telephone keypad. We will
     pause for a moment to give everyone an opportunity to signal for
     questions. You’re first question comes from John Mennen from
     Bloomberg; please go ahead.

John Mennen:      When do you think you’re likely to reach the peak of

Stephen Hester:      That’s a little hard to call; if you’d ask me a couple of
     months ago, I would have said the second half of this year or sometime in
     2010. It’s not impossible that we should be more optimistic now because
     obviously some of the economic indicators are looking better and certainly
     in the detail of our results we show how the flow of bad debts into our
     books has been moderating. I am not going to call the turn today. I think
     we need more evidence before being able to do that and even if the
     technical peak is either near or has passed, I do think that we should
     expect it to be some years before impairments subside, as things like
     unemployment and so on which will continue to rise, cause bad debts in a
     series of our businesses and those of other banks. The technical peak, I
     think, is less important than the fact that there will be two or three years of
     elevated provisions.

John Mennen:         But it could easily be for 2010 rather than this year.

Stephen Hester:    Today, it feels more optimistic than that, but I think we’re still
     at a point where one needs to be cautious at over-interpreting short-term
     economic indicators.

John Mennen:        These [logs] are supposed to be compared with Lloyds; why
     do you think they were more optimistic than you?

Stephen Hester: Clearly you can’t hold me accountable for analysing Lloyds’
     results and why they speak as they speak. We have a business which
     we’re describing with a transparency that no other bank is matching, with
     a clarity in terms of our outlook and our performance targets. All I can tell
     you is we’re calling it as we see it.

Operator:   Your next question comes from Gill Traynor from The Guardian;
     please go ahead.

Gill Traynor: Could I just ask you to explain a little bit about the reference you
       make to the Asset Protection Scheme and your business banking
       operations? Are you saying there that you think that the EU are going to
       need you to scale back in that area?

Stephen Hester:     What I’m saying is that the EU have, of course, oversight
     over all the State aid that need to approve, but primarily are looking at two
     things. They’re firstly looking at viability; in other words, are our
     restructuring plans likely to do the job of getting us back to stand-alone
     health within a reasonable period of time. I believe they will conclude that
     to be the case since what we have announced is the furthest reaching
     restructuring programme ever announced by a bank; that is one area that
     they need to scrutinise and rule on.

       The second area that they are interested in with all banks that they look at
       for State aid, not just us, is market share and they have sought in the
       other cases that they have looked at so far - Commerce Bank, for
       example, Fortis and I think that they have made public that they are doing
       this as they look at us and Lloyds - to find measures to reduce the
       domestic market share of the banks in question and in our case they are
       aiming particularly at our small business market share. They are asking
       us to take measures in this regard; we are in discussions with them since

      we want to make sure that anything that we do does not weaken our
      return to health and does not harm our customers; so I think it is
      premature to know where we will come out.

Gill Traynor:      Could you remind me what your market share is in small
       business banking?

Stephen Hester:     It totally depends how you count it; it would be between 20
     and 30%.

Gill Traynor:       You are not going to talk about the type of things they are
       asking you to do at this point?

Stephen Hester:    I think it is just still premature; they are in the process of
     learning about our business and about the options that would be sensible.

Gill Traynor:        The other question I am sure you are not going to answer
       either is when do you think you will have the answers?

Stephen Hester:      Everyone is aiming for the Asset Protection Scheme and the
     related EU approvals to be received by the Autumn; there is no guarantee
     of that, but that is the aim.

Gill Traynor:       Can I just ask one point of clarity on the APS that the
       number of the assets looks very unfamiliar, 316 I think it says; what
       happened there; wasn’t it 325 before?

Stephen Hester:     The portfolio continues to be refined; has been refined over
     the last four months. There may well be more changes in the next six
     weeks as we move toward the finishing line on this, but as of the moment
     we have taken out some of the assets that we were originally wanting to
     insure through a combination of technical difficulties and not needing to.
     We have always said there would be small changes; I would have thought
     that something between 5 and 10% of the original assets we identified will
     change in the final pool and we are still working through that.

Gill Traynor:       But the actual price you are paying for the insurance won’t

Stephen Hester: There is a little negotiation to have with the Government on
     that subject, which is a joy ahead of us.

Gill Traynor:          So you are still trying to change the price you will pay; is it
       still the tax loss you want back?

Stephen Hester:     I think we said something very important today in our
     statement and that is that our central view - it could of course be quite
     difference than this - but our central view is that the Government will make
     as much money out of us on APS as it loses in terms of loss coverage on
     assets. That is a good thing; it means that Government support will be
     properly paid for, but that our shareholders and our customers will benefit
     from the insurance component on the way through as we restore
     ourselves to stand alone health. I believe that the scheme, broadly, as we
     currently see it, will be the one that is enacted, but there is still our details
     to argue about.

Operator:   Your next question comes from Adam James from the Financial
     Times; please go ahead.

Adam James:       I just wondered whether you could give a bit more detail as
     to why you think the Investment Banking performance will deteriorate in
     the Second Half.

Stephen Hester:      You will see on the slides that we have put up on the
     internet in guide slides that will be used in the analysts’ presentation later
     this morning. We have shown six Quarters worth of investment banking
     performance stripped of one-off items, which crowd the performance
     considerably like fair value of debt and so on. What that shows you is that
     the performance in the First Quarter - and indeed in the second, although
     that was weaker than the first - are really much higher than trend lines.
     I have learned over many years that predicting investment banking
     revenues quarter-by-quarter is a fool’s game, so I am not making
     prediction for the Second Half, but what we are clearly saying is that
     normal revenues in that business are significantly lower than the revenues
     that we and other investment banks reported in the first bit of this year,
     and therefore it would be prudent to have an eye on what is normal as
     opposed to the abnormal benefits of the First Half.

Operator:   The next question comes from Clara Marques from Reuters;
     please go ahead.

Clara Ferreira-Marques: I had a question actually on capital markets; you say
      it is hard to predict it quarter-by-quarter. What about going into 2010 and
      2011, which seems to be when you start to see your overall business
      recovering; could you give us a little bit of an idea of how you see the
      capital markets moving and particularly the impact on your business of

Stephen Hester:      We have set out in the detail of our release performance
     targets for 2011 and for 2013, for every one of our businesses including
     the Investment Bank. There is a massive amount of detail in our release,
     so I am sure it will take the analysts some days, if not weeks, to work
     through the data that we put out. I think you will find a great deal of
     transparency about what we are expecting from these businesses, albeit
     falling short of getting into difficulties in terms of making a proper forecast.
     We believe that the Investment Bank, which has been radically
     restructured, very substantially reduced in its size and scope, and that the
     remaining nature of our Investment Bank will be strong, will be profitable,
     will be good for shareholders, albeit exhibiting a level of volatility that
     means it is important to balance it with a larger quantum of more stable
     retail and commercial businesses which we do.

Clara Ferreira-Marques: What about margins; would you be able to tell us a
      little bit about the outlook for those? A bit of a drop coming down from last
      year’s level of over 2%, and certainly Lloyds said they were expecting a
      recovery certainly next year; when do you see that coming?

Guy Whittaker:       We saw margins drop from just over 2% to 1.69% in the
     First Half of the year; that was very much in line with the guidance that we
     put out on the First Quarter interim management statement and really
     reflecting a margin depression in three areas: firstly through the low
     interest rate environment and deposit floors; secondly through the
     incremental costs of term funding; and thirdly through measures we have
     taken to strengthen liquidity on the balance sheet. We have kept the
     same guidance on a full year basis of still around 1.60, which may be a
     few basis points down from here, and obviously as we move through time
     we would expect the front book asset price margins to start to compensate
     for some of these drags on the funding side.

Clara Ferreira-Marques: Does that mean an improvement going in to next

Guy Whittaker:      It means probably slightly lower in the Second Half than the
     First Half and then a carrying rate into 2010, where perhaps we can start
     to see things getting a little better.

Operator:   The next question comes from Margot Patrick from Dow Jones;
     please go ahead.

Margot Patrick:     I just wanted to ask you about recovery prospects; you say
     overall results may not substantially improve until 2011. It sounds like you
     are pretty negative on the rest of the year, what with the loan impairments
     and investment banking revenue; does that suggest that the Second Half
     is going to be worse than the First Half?

Stephen Hester:        Of course, there is an awful lot going on in our numbers.
     If we look at the core bank I think that we would see comparative stability
     outside the investment banking businesses. Of course, lots of things
     going up and down within that, but comparative stability overall, but we
     think it is likely that the investment banking profits will substantially reduce
     because they were well above trend in the First Half. Therefore it is likely
     that the core bank will have significantly lower profits in the Second Half
     and obviously as we have indicated, it will take some years to rebuild the
     quality of the ongoing profit that we target and we have set out very clear
     performance matrices for that over time.

       In non-core, things are more unpredictable because there we are reducing
       risk. The pace at which we take losses both through disposals and
       through winding down risk, is harder to predict and therefore the non-core
       result has a chance of being better than it was in the First Half. I don’t
       really want to get so trapped into making forecasts about that period; so
       that is how I would think about the Second Half.

Margot Patrick:   Do you think then other banks are being unrealistic in
     suggesting that we have turned a corner?

Stephen Hester:     This is a still a hazardous forecasting environment; we may,
     when we look back on this period, feel that the world economy has turned
     a corner, but that I think that it is my job to make sure that RBS’s recovery

      will take place even if economic conditions remain difficult, so we have to
      plan on a cautious basis. If things turn out better than that, then that is
      terrific, everyone will be happy about it. We have to plan in that way and I
      think that it is to be avoided to read too much into still relatively short
      amounts of economic data.

Operator:   Your next question comes from Russell Lynch from Press
     Association; please go ahead.

Russell Lynch:     On the Global Banking and Markets, you have had a very
     good six months there; just looking at the expenses, the staff cost seems
     to have gone up by 11% to £1.79 billion. How much is RBS going to be
     paying out in bonuses based on the First Half performance, because
     obviously it has been an above trend performance?

Stephen Hester:      Much of that, by the way, is foreign exchange and we will
     change the accounting for bonuses because as you know, RBS has led
     the way among banks in the world in introducing a standard across the
     bank, both deferral for bonuses and a call back, so that bonuses are not
     paid where performance is poor and are taken back where performance
     turns poor in the future. You can’t actually, I am afraid, interpret anything
     from those numbers. Secondly, we will pay no bonuses whatsoever
     based on First Half performance. Any bonuses that are awarded are
     based on the Full Year, with the call back from future years as a feature
     and so it is premature to make a comment on that.

      However, what I think I must be clear about is that while we have led the
      way in terms of the form of bonuses to make sure that they are not
      inappropriate in terms of just taking or in terms of reward, this is a very
      important job that our staff are doing and to turn the bank around to make
      money to allow the taxpayer to get out and we will pay competitively for
      people who are doing a good job for us. The people who got us in to
      trouble are not here anymore and the people that are working hard for this
      bank we need them to be motivated, we need them to be good and we
      need them to stay in their seats. During the First Half we lost people; in
      the First Half the rate of turnover of our best people doubled around this
      bank. To be clear with our staff that they will be paid competitively, not
      overpaid, but competitively, in a safe form for bringing this bank back to

Russell Lynch:      In terms of the small business area you mentioned earlier, I
     think you said on the business loans side in terms of the Government
     commitment, you may struggle to reach the target this year because of the
     commercial realities of the situation. What would happen if you undershot
     business lending this year? Would you just add it … would it be a rolling
     commitment? I am just wondering what the situation was.

Stephen Hester: To be honest, I don’t the answer to that, but I do want to be
     very, very clear, we have lent 38 billion of new loans to the UK this year;
     we are completely determined to fulfil our commitment, which is to make
     available lending should creditworthy people want to borrow it. It is a
     weird thing for a banker to say, or to be sorry about, but in mortgages
     while we have grown total lending, net lending, in small businesses we
     have not because just as we have lent a lot of money, a lot of people have
     paid us back. I suppose I should be happy that people are paying us
     back, even though it means that in this period our lending fell short of the
     target. We are open for business; we are ready to do business; we
     accepted 85% of all small business applications for loans for this year,
     which is more or less the same percentage as last year. I am very
     comfortable that we are fulfilling both the letter and the spirit of our
     commitment in this regard and supporting our customers

Russell Lynch:     Last one on overall staff numbers; obviously there’s been
     some hefty restructuring this year. I wondered if you can confirm what the
     headcount is as of the end of, June compared to when it was when you
     took over

Stephen Hester:      That is in our release and I’m just looking at my colleagues
     to figure out what page it’s on - page 203. The answer to your question is
     that since last October, forgetting this period, but since last October when
     I took over, we’ve announced 16,000 job reductions globally, of which
     around 10,000 was in the UK and of those 10,000 about 7,000 were
     outside the Investment Bank and just over 3,000 has actually happened
     as opposed to is in process. I hesitate to say I’m pleased to say, because
     I very much understand the human costs here, but less than a quarter of
     the banking staff that we have let go have been through compulsory
     redundancy, the rest will be managed in a voluntary way

Russell Lynch:     What sort of scale of restructuring going forward here; is it
     reasonable to expect say the same amount of job cuts again or…?

Stephen Hester:     Well I have always said that I will not give global numbers
     and that we will work this out and tell our staff first, step by step, so I’m
     going to continue with that line. I think it’s a very important line; it is our
     attempt to make the vast majority of restructuring measures in our bank
     this year and next so that we can, as quickly as possible, as quickly as
     responsible have all our people looking forward and concentrating on
     serving customers as most of them are doing today

Operator:  The next question comes from Miles Nelligan from Reuters; please
     go ahead

Miles Nelligan:      My questions have been comprehensively answered, thank

Operator:   Your next question comes from Adam James from Financial
     Times; please go ahead

Adam James:       I was just going to ask a question about the business lending
     and the targets there and that’s been done too.

Operator:   Your next question comes from Margot Patrick from Dow Jones,
     please go ahead

Margot Patrick:   I just wanted to follow up on what you said about the
     European Union and small business lending; I think you said they asked
     you to take measures on that; what are you actually doing at this stage?

Stephen Hester:     We are in discussions with them; they would like to see us
     reduce our market share of small business banking overall. We are
     discussing with them what is and isn’t feasible and what is and isn’t
     sensible in that regard. Of course we don’t believe that there is a case to
     answer there, but they do and we need their agreement to the State aid
     and so we and the Government are engaging with them on that subject

Margot Patrick:      What are the possibilities; how could you carve that out?

Stephen Hester:       That’s what we’re talking about; obviously I don’t want to get
     into it until we have a proposal that’s viable.

Margot Patrick:   Are you taking any steps now, because that contrasts with
     what you’re saying about lending right now?

Stephen Hester:       I agree, there is a contrast in here and it’s an uncomfortable
     one; it is our job to support our customers and anything that happens that
     disrupts our ability to do that is not good for the UK economy, so that point
     is being taken into account in our discussions with the EU

Operator:   Your next question comes from Gill Traynor from the Guardian;
     please go ahead

Gill Traynor:        I’m sorry if this is contained in all these pages that are in
       front of me, but have you disclosed the remuneration package for your
       new Financial Director?

Stephen Hester:     We have not, but what I can say to you is that it is - and
     obviously we will in the annual report - but it is in scale completely
     conventional among the other Finance Directors of the Bank and a bit
     lower than Guy has been guessing. In form it is in line with my contract,
     which is to say there’s this unique ‘no payment for failure’ clause, which he
     has agreed to. The performance targets will be the same as mine in any
     bonus and long term incentive, and the structure will be similar, albeit the
     amounts obviously will be conventional for a Finance Director, rather than
     Chief Executive

Gill Traynor:         He gets a pay deal that looks a bit like yours, but a bit less
       potentially at the end of it.

Stephen Hester:      Considerably less, but I hope good, if we achieve what I
     think is very important to the taxpayer and everyone else that we should
     achieve, and as I say the package is completely in line in quantum, though
     not in form with that of other Finance Directors of the major UK banks

Operator:   Your next question comes from Clara Marques from Reuters;
     please go ahead

Clara Ferreira-Marques: I’d like to take you back to the Asset Protection
      Scheme; is there any way that you can give us an idea of what proportion
      of the impairments that you’ve reported today, will actually go into the

      APS? I’d also like to clarify that I think you said earlier that you expect the
      final deal to be broadly similar to the outline that we had back in February.

Stephen Hester:      Two questions; we said broadly 70% in the First Half of the
     impairments and write-downs were covered. That number will bounce
     around over time depending which particular loans go bad and so on and
     so forth, but broadly 70%. In terms of the final shape of the scheme,
     obviously to some extent that is in the gift of the Government and the EU;
     anything I say must be caveated by that. My expectation, although not
     certainty, is that the final shape of the scheme will be broadly similar to
     that, that was initially announced

Operator:   Your next question comes from Russell Lynch from Press
     Association; please go ahead

Russell Lynch:     On the RBS lending commitments; my memory maybe
     failing me, but when you announced the APS wasn’t it 25 billion that you
     were going to be lending this year? Have you actually overshot the
     lending target by quite a long way?

Stephen Hester:    Unfortunately there is an uncontrollable element; first of all
     the lending commitment was to make available loans up to 25 billion on a
     net basis; whether we actually lent that much or not would depend on
     whether there was demand and creditworthy borrowers and that in turn
     depended on how many foreign banks were going to disappear from the
     UK market, because the whole point of these commitments was to fill the
     gap from foreign bank withdrawal. In the mortgage market we have lent in
     excess of our target because a lot of people have withdrawn from the
     mortgage market and so we were able to grow our market share and
     support customers. In the business market foreign banks have broadly
     not withdrawn; there isn’t such a gap; we haven’t been able to increase
     our market share.

      Although we have done well in maintaining the percentage of acceptances
      that we’ve always maintained, 85% of everyone who asks us for a loan,
      gets it, in small business territory and we’ve lent a lot of money in terms of
      new loans. As I say, businesses generally have been trying to pay back
      their debt and be more cautious - as we should all want them to be - and
      so just as we’ve lent new money, businesses have at the same time been
      paying us back and so our net lending is not the target that we had, albeit

      for positive reasons in terms of the economy, rather than because we
      were not trying to lend the money

Russell Lynch:    When we talk about the 25 billion, is it 25 billion extra on top
     of what you would have been lending any way?

Stephen Hester:      25 billion on top of the amount that we had lent already.

Russell Lynch:      Which was … do you have a rough figure?

Stephen Hester:      The figures that I’m giving you … what we were offering to
     do was to increase our loan balances, which is new loans net of
     repayments by up to that amount. Obviously we can’t control the
     repayments; if someone wants to repay us we can’t refuse to be repaid; all
     we can do is offer to lend to roughly the same proportion of people as
     asked us to lend last year and indeed make clear, and I think what part of
     this is the actual numbers, but part of it is the atmosphere. I hope you’ll
     have noticed in the last week, for example, a lot of promotional activity
     with us, putting a lot of ads in newspapers and so on.

      We want everyone to understand we are open for business; if you’re credit
      worthy, if you have a good use for money, come and see us; we will lend
      you that money if you have a good case to make. We are not in any way
      trying to return the UK to the bad old days where people borrowed too
      much and didn’t save enough. The UK does have to borrow less and
      save more. We simply want to make sure that that rebouncing happens in
      an organised way rather than a forced way

Operator:   There are no further questions at this time. I would now like to
     hand the call back to Stephen for any closing comments

Stephen Hester:    Thank you very much; I think it will take everyone some time
     to wade through the fine print of our announcements which I look forward
     to answering any more questions you have in other forums on that, but in
     the meantime thanks for listening and onwards and upwards. Thank you,
     bye bye

Speaker:   Ladies and gentlemen that will conclude today’s presentation.
     Thank you for your participation; you may now disconnect.


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