Royal Bank of Scotland : Segmental Reporting Restatement Document

The Royal Bank of Scotland Group plc (RBS)

Forward-looking statements

Certain sections in this document contain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, including (but not limited to) those with respect to RBS and its subsidiaries' regulatory capital position, financial position, risk-weighted assets, profitability and financial performance and the implementation of RBS's transformation programme under certain specified scenarios. In addition, forward-looking statements may include, without limitation, statements containing words such as 'intends', 'believes', 'expects', 'anticipates', 'targets', 'plans', 'will' and similar expressions or variations on these expressions. These statements concern or may affect future matters, such as RBS's future economic results, business and capital plans and ability to achieve current strategies. Forward-looking statements are subject to a number of risks and uncertainties that might cause actual results and performance to differ materially from any expected future results or performance expressed in, or implied by, the forward-looking statements. Factors that could cause or contribute to differences in current expectations include, but are not limited to, legislative, political, fiscal and regulatory developments, accounting standards, competitive conditions, technological developments, interest and exchange rate fluctuations and general economic conditions. These and other factors, risks and uncertainties that may impact any forward-looking statement or RBS's actual results are discussed in RBS's 2016 Annual Report and Accounts and its interim results for the six-months ended 30 June 2017 and materials filed with, or furnished to, the United States Securities and Exchange Commission, including, but not limited to, RBS's most recent Annual Report on Form 20-F and Reports on Form 6-K. The forward-looking statements contained in this document speak only as of the date they are made or revised and RBS does not assume or undertake any obligation or responsibility to update any of the forward-looking statements contained in this document, whether as a result of new information, future events or otherwise, except to the extent legally required.

Overview of business re-segmentation

This announcement sets out changes to RBS's operating segments and changes in results presentation. The announcement contains re-presented financial results for the year ended 31 December 2016 and, to aid comparison of RBS's fourth quarter 2017 results with prior periods, re-presented financial information for the quarters ended 30 September 2017 and 31 December 2016.

Segmental reorganisation

RBS continues to deliver on its plan to build a strong, simple and fair bank for both customers and shareholders. To support this and reflect the progress made, the previously reported operating segments are now realigned. Unless otherwise stated, the following segments have been re-presented for the above periods.

· Williams & Glyn (W&G)is integrated into UK Personal and Business Banking (UK PBB). UK PBB serves individuals and mass affluent customers in the UK together with small and medium businesses, including Ulster Bank customers in Northern Ireland.

· Capital Resolution, with the exception of the Retail Mortgaged Backed Securities (RMBS) litigation costs, is integrated into NatWest Markets(NWM). NWM provides financing and risk management to corporate and global financial institutional customers and trades with financial institutions, investors and counterparties for distribution and market making.

· Capital Resolution RMBS litigation related costs are now included, at a reportable operating segment level, within Central items & other.There has been no impact on the legal entity level reporting. Central items include corporate functions, such as treasury, finance, risk management, compliance, legal, communications and human resources. Central functions manage RBS capital resources and RBS wide regulatory projects and provide services to the reportable segments.

· NatWest Markets (NWM)sees a reallocation of expenses between direct and indirect as a result of reorganisation in preparation for the implementation of the UK ring fencing regime. This representation takes effect from 1 January 2017 and does not affect previous periods.

· RBS International (RBSI)is moved out-with the Commercial and Private Banking (CPB) franchise, in preparation for the implementation of the UK ring fencing regime.

The Royal Bank of Scotland Group plc (RBS)

Business transfers

Changes to RBS's businesses, which impact its financial reporting, but where comparatives are not re-presented, are detailed below. Unless otherwise stated, the effective date of implementation is 1 October 2017.

· Shipping and other activities, which were formerly inCapital Resolution,are transferred from NWM to Commercial Banking. Commercial Banking serves commercial and corporate customers in the UK.

· UK PBB Collective Investment Funds (CIFL) business is transferred toPrivate Banking in order to better serve customers. Private Banking serves high net worth individuals in the UK.

· The RBS International (RBSI) reportable operating segment is aligned to thelegal entityThe Royal Bank of Scotland International (Holdings) Limited. This predominantly involved transfers from Private Bankingand Services and Functions within Central items & other in preparation for the implementation of the UK ring-fencing regime.

· Commercial Bankingwhole business securitisations and relevant financial institutions (RFI) are transferred to NWMduring December 2017. RFIs are prohibited from being within the ring-fence due to their nature and exposure to global financial markets, the move is in preparation for the implementation of the UK ring-fencing regime.

Impact of business transfers

Annual results 2017

RBS's results for the year ended 31 December 2017 will be announced on Friday 23 February 2018. These results will be reported on the new structure and reporting basis as described above.

In conjunction with this Segmental Reporting Restatement Document, a financial supplement showing re-presented financial information for the last nine quarters is available atwww.rbs.com/results

Document roadmap

Pages 3 to 8 of this document show the income statement, balance sheet line items and key metrics for the new reportable segments.

Re-segmentation reconciliation Appendix - summarises how the previously reported segments are allocated to the new reportable segments. These tables include the income statement, key metrics (e.g. return on equity (ROE), net interest margin, cost:income ratio and balance sheet line items).

For further information contact:

Matt Waymark

Investor Relations

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