Report of Foreign Issuer

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 November 6, 2009

Commission File Number: 001-10306

The Royal Bank of Scotland Group plc

RBS, Gogarburn, PO Box 1000
Edinburgh EH12 1HQ

(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- ________

The following information was issued as Company announcements in London, England and is furnished pursuant to General Instruction B to the General Instructions to Form 6-K:

Condensed consolidated balance sheet

at 30 September 2009 - pro forma (unaudited)

	30 September 2009	30 June 2009	31 December 2008
	£m	£m	£m

Assets
Cash and balances at central banks	36,567	34,302	11,830
Net loans and advances to banks	60,274	48,624	70,728
Reverse repurchase agreements and stock borrowing	37,190	35,076	58,771
Loans and advances to banks	97,464	83,700	129,499
Net loans and advances to customers	587,996	593,277	691,976
Reverse repurchase agreements and stock borrowing	43,463	47,485	39,289
Loans and advances to customers	631,459	640,762	731,265
Debt securities	251,281	229,059	253,159
Equity shares	16,830	14,220	22,198
Settlement balances	28,634	23,244	17,812
Derivatives	552,466	555,890	991,495
Intangible assets	15,339	15,117	16,415
Property, plant and equipment	18,208	16,292	17,181
Deferred taxation	7,667	7,573	5,786
Prepayments, accrued income and other assets	19,664	20,620	21,573
Assets of disposal groups	4,737	3,666	480

Total assets	1,680,316	1,644,445	2,218,693

Liabilities
Bank deposits	138,584	135,601	178,943
Repurchase agreements and stock lending	39,816	44,142	83,666
Deposits by banks	178,400	179,743	262,609
Customer deposits	423,769	415,267	460,318
Repurchase agreements and stock lending	69,465	75,015	58,143
Customer accounts	493,234	490,282	518,461
Debt securities in issue	266,213	248,710	269,458
Settlement balances and short positions	71,891	60,282	54,264
Derivatives	537,522	534,632	969,409
Accruals, deferred income and other liabilities	20,754	21,543	24,140
Retirement benefit liabilities	1,410	1,363	1,564
Deferred taxation	3,275	3,344	3,177
Insurance liabilities	7,480	7,186	7,480
Subordinated liabilities	33,085	32,106	43,678
Liabilities of disposal groups	8,201	7,465	138

Total liabilities	1,621,465	1,586,656	2,154,378

Equity:
Minority interests	2,185	2,123	5,436
Owners' equity*	56,666	55,666	58,879

Total equity	58,851	57,789	64,315

Total liabilities and equity	1,680,316	1,644,445	2,218,693


*Owners' equity attributable to:
Ordinary shareholders	48,820	47,820	45,525
Other equity owners	7,846	7,846	13,354

	56,666	55,666	58,879

Commentary on condensed consolidated balance sheet - pro forma

Total assets of £1,680.3 billion at 30 September 2009 were up £35.9 billion, 2%, compared with 30 June 2009, primarily due to exchange rate movements following the weakening of sterling since June.

Loans and advances to banks increased by £13.8 billion, 16%, to £97.5 billion reflecting higher reverse repurchase agreements and stock borrowing ("reverse repos"), up by £2.1 billion, 6% to £37.2 billion, and growth in bank placings, up by £11.7 billion, 24%, to £60.3 billion as a result of increased wholesale lending.

Loans and advances to customers were down £9.3 billion, 1%, at £631.5 billion. Within this, reverse repos decreased by 8%, £4.0 billion to £43.5 billion. Excluding reverse repos, customer lending declined by £5.3 billion, 1% to £588.0 billion or £3.9 billion, 1% before impairment provisions. This reflected reductions in Global Banking & Markets of £11.0 billion, Non-Core, £9.5 billion, US Retail & Commercial, £2.2 billion, and Ulster Bank, £0.8 billion, partially offset by growth in Retail, £3.8 billion, UK Corporate & Commercial, £1.3 billion, Wealth, £1.0 billion, and GTS, £0.7 billion, together with the effect of exchange rate movements, £12.5 billion.

Debt securities were up £22.2 billion, 10%, to £251.3 billion and equity shares rose by £2.6 billion, 18%, to £16.8 billion, principally due to increased holdings in Global Banking & Markets and Group Treasury, in part reflecting a £6.0 billion growth in the gilt liquidity portfolio.

Settlement balances rose by £5.4 billion, 23% to £28.6 billion as a result of increased customer activity.

Deposits by banks declined by £1.3 billion, 1% to £178.4 billion. This reflected decreased repurchase agreements and stock lending ("repos"), down £4.3 billion, 10% to £39.8 billion partially offset by increased inter-bank deposits, up £3.0 billion, 2%, to £138.6 billion.

Customer accounts were up £3.0 billion, 1% to £493.2 billion. Within this, repos declined £5.6 billion, 7% to £69.5 billion. Excluding repos, deposits increased by £8.5 billion, 2%, to £423.8 billion, with reductions in Global Banking & Markets, down £9.0 billion, more than offset by growth across all other divisions, up £11.1 billion, and the effect of exchange rate movements, £6.4 billion.

Debt securities in issue increased £17.5 billion, 7%, to £266.2 billion mainly as a result of growth in Global Banking & Markets and Group Treasury, partly to fund the growth in the gilt liquidity portfolio, together with the effect of movements in exchange rates.

Settlement balances and short positions were up £11.6 billion, 19%, to £71.9 billion reflecting increased customer activity.

Subordinated liabilities rose by £1.0 billion, 3%, to £33.1 billion, with the redemption of £0.9 billion undated loan capital more than offset by the effect of exchange rate movements and other adjustments, £1.9 billion.

Owners' equity increased by £1.0 billion, 2% to £56.7 billion. Reductions in available-for-sale reserve losses of £2.1 billion, net of tax, and exchange rate movements of £0.6 billion were offset in part by the £1.5 billion attributable loss for the period and the payment of other owners dividends of £0.2 billion.

Notes to pro forma results

1. Basis of preparation

The pro forma financial information shows the underlying performance of the Group including the results of the ABN AMRO businesses to be retained by the Group. This information is prepared using the Group's accounting policies and is being provided to give a better understanding of the results of the RBS operations excluding the results attributable to the other Consortium Members.

Group operating profit on a pro forma basis excludes:

· amortisation of purchased intangible assets;

· write-down of goodwill and other intangible assets;

· integration and restructuring costs;

· gain on redemption of own debt; and

· gain on sale of strategic investments.

2. Taxation

The credit for taxation differs from the tax credit computed by applying the standard UK corporation tax rate of 28% (2008 - 28.5%) as follows:
	Quarter ended			Nine months ended
	30 September 2009	30 June 2009	30 September 2008	30 September 2009	30 September 2008
	£m	£m	£m	£m	£m

(Loss)/profit before tax	(2,077)	59	1,903	(2,062)	1,177

Expected tax (credit)/charge at 28% (2008 - 28.5%)	(582)	16	542	(578)	335
Unrecognised timing differences	(223)	(73)	84	(207)	88
Other non-deductible items	35	38	41	108	203
Non-taxable items:
- Gain on redemption of own debt	-	(692)	-	(692)	-
- Other	(27)	(93)	(34)	(203)	(259)
Taxable foreign exchange movements	9	(23)	9	(14)	16
Foreign profits taxed at other rates	126	(18)	87	173	65
Losses/(gains) in year not recognised	83	181	(5)	267	35
Other	(6)	(25)	-	(29)	-
Adjustments in respect of prior periods	9	49	-	187	(62)

Actual tax (credit)/charge	(576)	(640)	724	(988)	421

The Group has recognised a deferred tax asset at 30 September 2009 of £7,667 million (30 June 2009 - £7,573 million; 31 December 2008 - £5,786 million), of which £6,032 million (30 June 2009 - £5,639 million; 31 December 2008 - £4,706 million) relates to carried forward trading losses in the UK. Under the HM Revenue & Customs rules, these UK losses can be carried forward indefinitely to be utilised against profits arising in the future. The Group has considered the carrying value of this asset as at 30 September and concluded that it is recoverable based on the base case future profit projection.

Notes to pro forma results

3. Loan impairment provisions

Operating (loss)/profit is stated after charging loan impairment losses for 3Q09 of £3,262 million (2Q09 - £4,520 million; 3Q08 - £1,023 million; YTD09 - £10,058 million; YTD08 - £2,429 million). The balance sheet loan impairment provisions increased in the three months ended 30 September 2009 from £13,773 million to £

15,124 million, and the movements thereon were:
	30 September 2009
	Core	Non-Core	Total	30 June 2009	31 December 2008
	£m	£m	£m	£m	£m

At beginning of period	5,575	8,198	13,773	9,451	4,956
Transfers to disposal groups	-	(312)	(312)	-	-
Currency translation and other adjustments	283	(206)	77	(505)	1,023
Disposals	-	-	-	-	(178)
Amounts written-off	(438)	(1,252)	(1,690)	(1,932)	(2,897)
Recoveries of amounts previously written-off	53	61	114	140	261
Charge to income statement	1,107	2,155	3,262	6,796	6,478
Unwind of discount	(17)	(83)	(100)	(177)	(192)

	6,563	8,561	15,124	13,773	9,451

Provisions at 30 September 2009 include £151 million (30 June 2009 - £126 million; 31 December 2008 - £127 million) in respect of loans and advances to banks.

4. Strategic disposals

	Quarter ended			Nine months ended
	30 September 2009	30 June 2009	30 September 2008	30 September 2009	30 September 2008
	£m	£m	£m	£m	£m

Gain on sale of investments in:
Bank of China (1)	(5)	-	-	236	-
Linea Directa	-	212	-	212	-
Provision for loss on disposal of Asian branches	(150)	-	-	(150)	-

	(155)	212	-	298	-

Note:
(1)	YTD09 includes £359 million attributable to minority interests.

Notes to pro forma results (continued)

5. Segmental analysis

Analysis of divisional contribution

The tables below provide an analysis of the divisional contribution for the quarter ended 30 September 2009 and the first nine months of 2009, by main income statement captions. The pro forma divisional income statements on pages 28 to 54 reflect certain presentational reallocations as described in the notes below. These do not affect the overall operating profit/(loss).

	Net interest income	Non- interest income	Total income	Operating expenses	Net insurance claims	Impairment losses	Operating profit/(loss)
	£m	£m	£m	£m	£m	£m	£m

Quarter ended 30 September 2009
UK Retail (1)	848	463	1,311	(752)	(91)	(404)	64
UK Corporate	607	329	936	(370)	-	(187)	379
Wealth	168	111	279	(159)	-	(1)	119
Global Banking & Markets (2)	474	1,385	1,859	(1,212)	-	(272)	375
Global Transaction Services	234	388	622	(347)	-	(22)	253
Ulster Bank	176	55	231	(172)	-	(144)	(85)
US Retail & Commercial	410	224	634	(497)	-	(180)	(43)
RBS Insurance	86	1,033	1,119	(178)	(928)	(2)	11
Central items	32	131	163	(42)	-	(1)	120

Core	3,035	4,119	7,154	(3,729)	(1,019)	(1,213)	1,193
Non-Core (3)	226	(286)	(60)	(466)	(126)	(2,066)	(2,718)
Amortisation of purchased intangible assets	-	-	-	(73)	-	-	(73)
Integration and restructuring costs	-	-	-	(324)	-	-	(324)
Strategic disposals	-	(155)	(155)	-	-	-	(155)

	3,261	3,678	6,939	(4,592)	(1,145)	(3,279)	(2,077)
RFS Holdings minority interest	602	539	1,141	(960)	(64)	(209)	(92)

Total statutory	3,863	4,217	8,080	(5,552)	(1,209)	(3,488)	(2,169)

Notes:
(1)	Reallocation of netting of bancassurance claims of £91 million from non-interest income.
(2)	Reallocation of £12 million between net interest income and non-interest income in respect of funding costs of rental assets, and to record interest on financial assets and liabilities designated as at fair value through profit or loss, £39 million.
(3)	Reallocation of £56 million between net interest income and non-interest income in respect of funding costs of rental assets and to record interest on financial assets and liabilities designated as at fair value through profit or loss, £5 million.

Notes to pro forma results (continued)

5. Segmental analysis (continued)

Analysis of divisional contribution (continued)

	Net interest income	Non- interest income	Total income	Operating expenses	Net insurance claims	Impairment losses	Operating profit/(loss)
	£m	£m	£m	£m	£m	£m	£m

Nine months ended 30 September 2009
UK Retail (1)	2,513	1,269	3,782	(2,336)	(117)	(1,228)	101
UK Corporate	1,666	968	2,634	(1,112)	-	(737)	785
Wealth	502	333	835	(481)	-	(23)	331
Global Banking & Markets (2)	1,969	7,539	9,508	(3,900)	-	(510)	5,098
Global Transaction Services	679	1,171	1,850	(1,066)	-	(35)	749
Ulster Bank	586	163	749	(541)	-	(301)	(93)
US Retail & Commercial	1,352	728	2,080	(1,625)	-	(549)	(94)
RBS Insurance	268	3,016	3,284	(569)	(2,479)	(8)	228
Central items	(151)	291	140	156	-	1	297

Core	9,384	15,478	24,862	(11,474)	(2,596)	(3,390)	7,402
Non-Core (3)	737	(3,714)	(2,977)	(1,454)	(440)	(7,410)	(12,281)
Amortisation of purchased intangible assets	-	-	-	(213)	-	-	(213)
Integration and restructuring costs	-	-	-	(1,058)	-	-	(1,058)
Gain on redemption of own debt	-	3,790	3,790	-	-	-	3,790
Strategic disposals	-	298	298	-	-	-	298
Write-down of goodwill and other intangible assets	-	-	-	(311)	-	-	(311)

	10,121	15,852	25,973	(14,510)	(3,036)	(10,800)	(2,373)
RFS Holdings minority interest	2,116	1,832	3,948	(2,933)	(307)	(748)	(40)

Total statutory	12,237	17,684	29,921	(17,443)	(3,343)	(11,548)	(2,413)

Notes:
(1)	Reallocation of netting of bancassurance claims of £117 million from non-interest income.
(2)	Reallocation of £39 million between net interest income and non-interest income in respect of funding costs of rental assets, and to record interest on financial assets and liabilities designated as at fair value through profit or loss, £89 million.
(3)	Reallocation of £192 million between net interest income and non-interest income in respect of funding costs of rental assets and to record interest on financial assets and liabilities designated as at fair value through profit or loss, £27 million.

Notes to pro forma results (continued)

6. 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. Assets and liabilities outside the scope of IAS 39 are shown separately.

	Held-for- trading	Designated at fair value through profit or loss	Available- for-sale	Loans and receivables	Other (amortised cost)	Finance leases	Other assets/ liabilities	Total
	£m	£m	£m	£m	£m	£m	£m	£m

At 30 September 2009
Cash and balances at central banks	-	-	-	36,567	-	-	-	36,567
Loans & advances to
banks	43,469	-	-	53,995	-	-	-	97,464
Loans and advances to
customers	47,149	2,127	-	568,394	-	13,789	-	631,459
Debt securities	118,237	2,705	119,232	11,107	-	-	-	251,281
Equity shares	11,474	2,100	3,256	-	-	-	-	16,830
Settlement balances	-	-	-	28,634	-	-	-	28,634
Derivatives (1)	552,466	-	-	-	-	-	-	552,466
Intangible assets	-	-	-	-	-	-	15,339	15,339
Property, plant and
equipment	-	-	-	-	-	-	18,208	18,208
Deferred taxation	-	-	-	-	-	-	7,667	7,667
Prepayments, accrued
income and other assets	-	-	-	1,588	-	-	18,076	19,664
Assets of disposal groups	-	-	-	-	-	-	4,737	4,737

Total assets	772,795	6,932	122,488	700,285	-	13,789	64,027	1,680,316

Deposits by banks	56,980	-	-	-	121,420	-	-	178,400
Customer accounts	58,439	5,719	-	-	429,076	-	-	493,234
Debt securities in issue	3,032	38,297	-	-	224,884	-	-	266,213
Settlement balances and
short positions	46,427	-	-	-	25,464	-	-	71,891
Derivatives (1)	537,522	-	-	-	-	-	-	537,522
Accruals, deferred income
and other liabilities	-	-	-	-	1,647	242	18,865	20,754
Retirement benefit liabilities	-	-	-	-	-	-	1,410	1,410
Deferred taxation	-	-	-	-	-	-	3,275	3,275
Insurance liabilities	-	-	-	-	-	-	7,480	7,480
Subordinated liabilities	-	1,414	-	-	31,671	-	-	33,085
Liabilities of disposal
groups	-	-	-	-	-	-	8,201	8,201

Total liabilities	702,400	45,430	-	-	834,162	242	39,231	1,621,465

Equity								58,851

								1,680,316

Notes to pro forma results (continued)

6. Financial instruments (continued)

Classification (continued)

	Held-for- trading	Designated as at fair value through profit or loss	Available- for-sale	Loans and receivables	Other (amortised cost)	Finance leases	Other assets/ liabilities	Total
	£m	£m	£m	£m	£m	£m	£m	£m

At 30 June 2009
Cash and balances at
central banks	-	-	-	34,302	-	-	-	34,302
Loans & advances to banks	35,849	-	-	47,851	-	-	-	83,700
Loans and advances to
customers	51,987	1,963	-	573,246	-	13,566	-	640,762
Debt securities	107,410	4,446	105,858	11,345	-	-	-	229,059
Equity shares	9,694	1,865	2,661	-	-	-	-	14,220
Settlement balances	-	-	-	23,244	-	-	-	23,244
Derivatives (1)	555,890	-	-	-	-	-	-	555,890
Intangible assets	-	-	-	-	-	-	15,117	15,117
Property, plant and
equipment	-	-	-	-	-	-	16,292	16,292
Deferred taxation	-	-	-	-	-	-	7,573	7,573
Prepayments, accrued
income and other assets	-	-	-	1,461	-	-	19,159	20,620
Assets of disposal groups	-	-	-	-	-	-	3,666	3,666

Total assets	760,830	8,274	108,519	691,449	-	13,566	61,807	1,644,445

Deposits by banks	58,017	-	-	-	121,726	-	-	179,743
Customer accounts	64,743	4,456	-	-	421,083	-	-	490,282
Debt securities in issue	1,051	34,198	-	-	213,461	-	-	248,710
Settlement balances and
short positions	37,224	-	-	-	23,058	-	-	60,282
Derivatives (1)	534,632	-	-	-	-	-	-	534,632
Accruals, deferred income
and other liabilities	-	-	-	-	1,618	24	19,901	21,543
Retirement benefit liabilities	-	-	-	-	-	-	1,363	1,363
Deferred taxation	-	-	-	-	-	-	3,344	3,344
Insurance liabilities	-	-	-	-	-	-	7,186	7,186
Subordinated liabilities	-	1,291	-	-	30,815	-	-	32,106
Liabilities of disposal groups	-	-	-	-	-	-	7,465	7,465

Total liabilities	695,667	39,945	-	-	811,761	24	39,259	1,586,656

Equity								57,789

								1,644,445

Note:
(1)	Held-for-trading derivatives include hedging derivatives.

Notes to pro forma results (continued)

6. Financial instruments (continued)

Valuation techniques

Refer to note 11 of the 2008 Annual Report and Accounts.

Valuation hierarchy

The table below shows financial instruments carried at fair value by valuation method.

	30 September 2009				30 June 2009
	Level 1 (1)	Level 2 (2)	Level 3 (3)	Total	Level 1 (1)	Level 2 (2)	Level 3 (3)	Total
	£bn	£bn	£bn	£bn	£bn	£bn	£bn	£bn

Assets
Fair value through profit or loss:
Loans and advances to banks	-	43.4	-	43.4	-	35.8	-	35.8
Loans and advances to customers	-	48.2	1.1	49.3	-	52.8	1.1	53.9
Debt securities	62.8	55.0	3.1	120.9	53.3	55.0	3.6	111.9
Equity shares	10.0	3.1	0.5	13.6	9.3	1.8	0.5	11.6
Derivatives	0.8	545.1	6.6	552.5	0.9	546.3	8.7	555.9

	73.6	694.8	11.3	779.7	63.5	691.7	13.9	769.1
Available-for-sale:
Debt securities	46.5	71.0	1.7	119.2	33.9	70.3	1.6	105.8
Equity shares	1.4	1.3	0.6	3.3	0.9	1.3	0.5	2.7

	47.9	72.3	2.3	122.5	34.8	71.6	2.1	108.5

	121.5	767.1	13.6	902.2	98.3	763.3	16.0	877.6

Liabilities
Deposits by banks and customers	-	121.0	0.1	121.1	-	127.0	0.3	127.3
Debt securities in issue	3.7	34.2	3.4	41.3	-	32.1	3.1	35.2
Short positions	36.0	10.2	0.2	46.4	29.9	6.9	0.4	37.2
Derivatives	1.8	532.6	3.1	537.5	1.6	528.8	4.2	534.6
Other financial liabilities (4)	-	1.4	-	1.4	-	1.3	-	1.3

	41.5	699.4	6.8	747.7	31.5	696.1	8.0	735.6

Notes:
(1)	Valued using unadjusted quoted prices in active markets for identical financial instruments. This category includes listed equity shares, certain exchange-traded derivatives, G10 government securities and certain US agency securities.
(2)	Valued using techniques based significantly on observable market data. Instruments in this category are valued using:
	(a)	quoted prices for identical instruments in markets which are not considered to be active or quoted prices for similar instruments trading in active or not so active markets; or
	(b)	valuation techniques where all the inputs that have a significant effect on the valuation are directly or indirectly based on observable market data.
	Instruments that trade in markets that are not considered to be active, but for which valuations are based on quoted market prices, broker dealer quotations, or alternative pricing sources with reasonable levels of price transparency and instruments valued using techniques include: most government agency securities, investment-grade corporate bonds, certain mortgage products, certain bank and bridge loans, repos and reverse repos, less liquid listed equities, state and municipal obligations, most physical commodities, investment contracts issued by the Group's life assurance businesses and certain money market securities and loan commitments and most OTC derivatives.

Notes to pro forma results (continued)

6. Financial instruments (continued)

Valuation hierarchy (continued)

Notes (continued):

(3)

Valued using a technique where at least one input (which could have a significant effect on the instrument's valuation) is not based on observable market data. Where inputs can be observed from market data without undue cost and effort, the observed input is used. Otherwise, the Group determines a reasonable level for the input.

Financial instruments included within level 3 of the fair value hierarchy primarily include cash instruments which trade infrequently, certain syndicated and commercial mortgage loans, unlisted equity shares, certain residual interests in securitisations, super senior tranches of high grade and mezzanine collateralised debt obligations (CDOs), other mortgage-based products and less liquid debt securities, certain structured debt securities in issue, and OTC derivatives where valuation depends upon unobservable inputs such as certain credit and exotic derivatives. No gain or loss is recognised on the initial recognition of a financial instrument valued using a technique incorporating significant unobservable data.

(4)

Comprise subordinated liabilities and write downs relating to undrawn syndicated loan facilities.

Notes to pro forma results (continued)

6. Financial instruments (continued)

Level 3 portfolios

	Carrying value
	30 September 2009			30 June 2009
	Core £bn	Non-Core £bn	Total £bn	Total £bn

Assets
Loans and advances	0.9	0.2	1.1	1.1
Debt securities:
- RMBS (1)	0.3	-	0.3	0.4
- CMBS (2)	0.3	-	0.3	0.4
- CDOs (3)	0.3	0.8	1.1	1.5
- CLOs (4)	0.2	0.8	1.0	0.7
- other ABS	0.9	0.3	1.2	0.6
- other	0.2	0.7	0.9	1.6
Equity shares	0.3	0.8	1.1	1.0
Derivatives:
- credit	1.4	2.0	3.4	5.1
- other	3.0	0.2	3.2	3.6

	7.8	5.8	13.6	16.0

Liabilities
Debt securities in issue	3.3	0.1	3.4	3.1
Derivatives
- credit	0.8	0.7	1.5	2.7
- other	1.5	0.1	1.6	1.5
Other portfolios	0.1	0.2	0.3	0.7

	5.7	1.1	6.8	8.0

Notes:
(1)	Residential mortgage-backed securities.
(2)	Commercial mortgage-backed securities.
(3)	Collateralised debt obligations.
(4)	Collateralised loan obligations.

Key points

· Level 3 assets and liabilities reduced in the third quarter reflecting general tightening of credit spreads and greater price observability.

· Decrease in level 3 assets of £2.4 billion; derivatives by £2.1 billion mainly due to credit spread effects and debt securities by £0.4 billion reflecting better price observability in asset-backed securities market.

· Level 3 liabilities decreased by £1.2 billion with reduction in derivatives and other portfolios due to credit spread effects partially offset by increase in notes issued with embedded features.

Notes to pro forma results (continued)

6. Financial instruments (continued)

Own credit

When valuing financial liabilities recorded at fair value, the Group takes into account the effect of its own credit standing. The categories of financial liabilities on which own credit spread adjustments are made are issued debt, including issued structured notes, and derivatives. An own credit adjustment is applied to positions where it is believed that counterparties would consider the Group's creditworthiness when pricing trades.

For issued debt and structured notes, this adjustment is based on independent quotes from market participants for the debt issuance spreads above average inter-bank rates (at a range of tenors) which the market would demand when purchasing new senior or sub-debt issuances from the Group. Where necessary, these quotes are interpolated using a curve shape derived from CDS prices.

The fair value of the Group's derivative financial liabilities has also been adjusted to reflect the Group's own credit risk. The adjustment takes into account collateral posted by the Group and the effects of master netting agreements.

The table below shows the own credit spread adjustments on liabilities recorded in the income statement during the first nine months of the year.

	Debt securities in issue
	Held-for -trading	Designated at fair value through profit and loss	Total	Derivatives (1)	Total
	£m	£m	£m	£m	£m

At 1 January 2009	1,346	1,027	2,373	450	2,823
Net effect of changes to credit spreads	242	(73)	169	54	223
Foreign exchange movements	(189)	(31)	(220)	-	(220)
New issues and redemptions (net)	(22)	11	(11)	-	(11)

At 1 July 2009	1,377	934	2,311	504	2,815
Net effect of changes to credit spreads	(308)	(84)	(392)	(166)	(558)
Foreign exchange movements	73	40	113	-	113
New issues and redemptions (net)	(9)	11	2	-	2

At 30 September 2009	1,133	901	2,034	338	2,372

Note:
(1)	The effect of change in foreign exchange rates, new issues and redemptions are not captured separately.

The effect of change in credit spreads could be reversed in future periods.

Notes to pro forma results (continued)

6. Financial instruments (continued)

Reclassification of financial instruments

During 2008, as permitted by amended IAS 39, the Group reclassified financial assets from the held-for-trading and available-for-sale categories into the loans and receivables category and from the held-for-trading category into the available-for-sale category. There were further reclassifications from the held-for-trading category to the loans and receivables category in the first nine months of 2009. The effect of the reclassifications and the balance sheet values of the assets were as follows.

	Additional gains that would have been recognised in the nine months to 30 September 2009 if reclassifications had not occurred			Additional gains that would have been recognised in the third quarter 2009 if reclassifications had not occurred
	Total	Reclassified in 2009	Reclassified in 2008	Total	Reclassified in 2009	Reclassified in 2008
	£m	£m	£m	£m	£m	£m

From held-for-trading to:
Available-for-sale	852	-	852	568	-	568
Loans and receivables	1,020	10	1,010	1,546	188	1,358

Total	1,872	10	1,862	2,114	188	1,926

	Assets reclassified in 2009	30 September 2009 All reclassifications		30 June 2009 All reclassifications
	Carrying value	Carrying value	Fair value	Carrying value	Fair value
	£m	£m	£m	£m	£m

From held-for-trading to:
Available-for-sale	-	8,159	8,159	8,442	8,442
Loans and receivables	1,988	14,971	11,961	16,458	12,158

	1,988	23,130	20,120	24,900	20,600

From available-for-sale to:
Loans and receivables	-	936	878	866	741

	1,988	24,066	20,998	25,766	21,341


During the quarter ended 30 September 2009, the balance sheet value of reclassified assets reduced by £1.7 billion. This was primarily due to disposals and repayments of £3.4 billion across a range of asset backed securities and loans, including disposals through restructures of £2.5 billion on real estate and leverage financed positions. Other movements include foreign exchange rate movements of £1.0 billion and gains taken to AFS reserve of £0.6 billion. For assets reclassified from held-for-trading to available-for-sale, net unrealised losses recorded in equity at 30 September 2009 were £1.3 billion (30 June 2009 - £1.9 billion).

Notes to pro forma results (continued)

7. Debt securities

	UK central and local government	US central and local government	Other central and local government	Bank and building society	Asset backed securities	Corporate	Other	Total
	£m	£m	£m	£m	£m	£m	£m	£m

30 September 2009
Held-for-trading	4,811	13,888	54,452	5,189	29,611	9,784	502	118,237
Designated as at
fair value through
profit or loss	374	3	391	453	377	1,101	6	2,705
Available-for-sale	11,940	9,146	31,506	9,014	51,787	5,400	439	119,232
Loans and receivables	11	-	1	41	8,848	2,174	32	11,107

	17,136	23,037	86,350	14,697	90,623	18,459	979	251,281

30 June 2009
Held-for-trading	7,753	9,526	43,289	5,079	32,539	8,266	958	107,410
Designated as at
fair value through
profit or loss	1,943	3	439	624	354	1,074	9	4,446
Available-for-sale	5,401	9,616	26,727	7,800	48,817	7,010	487	105,858
Loans and receivables	-	-	31	97	8,746	2,416	55	11,345

	15,097	19,145	70,486	13,600	90,456	18,766	1,509	229,059

31 December 2008
Held-for-trading	5,373	9,858	37,519	4,333	39,879	17,627	1,570	116,159
Designated as at
fair value through
profit or loss	2,085	510	456	-	236	1,551	456	5,294
Available-for-sale	11,330	6,145	21,735	10,549	62,067	5,689	1,207	118,722
Loans and receivables	-	-	-	114	8,961	3,749	160	12,984

	18,788	16,513	59,710	14,996	111,143	28,616	3,393	253,159

Notes to pro forma results (continued)

8. Derivatives

	30 September 2009		30 June 2009		31 December 2008
	Assets	Liabilities	Assets	Liabilities	Assets	Liabilities
	£m	£m	£m	£m	£m	£m

Exchange rate contracts
Spot, forwards and futures	34,228	34,628	29,060	28,178	82,963	83,433
Currency swaps	30,838	30,053	32,678	30,841	53,231	54,413
Options purchased	18,528	-	18,384	-	36,688	-
Options written	-	16,998	-	17,908	-	34,946

Interest rate contracts
Interest rate swaps	337,824	327,217	330,175	316,416	547,566	530,843
Options purchased	64,191	-	61,058	-	99,176	-
Options written	-	64,547	-	60,122	-	102,210
Futures and forwards	2,989	2,772	3,635	2,836	7,600	6,620

Credit derivatives	49,019	42,512	64,382	59,715	142,367	132,734

Equity and commodity contracts	14,849	18,795	16,518	18,616	21,904	24,210

	552,466	537,522	555,890	534,632	991,495	969,409

Note:
(1)	Of the total above at 30 September, £23.6 billion (30 June 2009 - £30.5 billion) of assets and £20.2 billion (30 June 2009 - £27.9 billion) of liabilities relate to Non-Core.

The Group enters into master netting agreements in respect of its derivative activities. These arrangements give the Group a legal right to set-off derivative assets and liabilities with the same counterparty. They do not result in a net presentation in the Group's balance sheet for which IFRS requires an intention to settle net or to realise the asset and settle the liability simultaneously, as well as a legally enforceable right to set off. They are, however, effective in reducing the Group's credit exposure from derivative assets. The Group has executed master netting agreements with the majority of its derivative counterparties resulting in a significant reduction in its net exposure to derivative assets. Of the £552 billion (30 June 2009 - £556 billion) derivatives assets shown above, £459 billion (30 June 2009 - £461 billion) were under such agreements. Furthermore, the Group holds substantial collateral against this net derivative asset exposure.

Risk and capital management

General

All disclosures in this section focus on the Group before RFS minority interests (hereafter 'pro forma basis' or 'results').

Capital

The Group aims to maintain appropriate levels of capital. For details on capital adequacy, refer to the 2008 Annual Report and Accounts.

Capital resources and ratios

The Group's regulatory capital resources on a proportional consolidation basis, excluding RFS minority interest, at 30 September 2009 and in accordance with the Financial Services Authority (FSA) definitions, were as follows:

	30 September 2009	30 June 2009	31 December 2008
	£m	£m	£m

Capital base
Core Tier 1 capital: ordinary shareholders' funds and minority interests less intangibles	32,971	35,177	34,041
Preference shares and tax deductible securities	14,113	13,949	23,091
Tax on the excess of expected losses over provisions	922	599	308
Less deductions from Tier 1 capital	(388)	(329)	(316)

Tier 1 capital	47,618	49,396	57,124
Tier 2 capital	19,256	18,879	28,967
Tier 3 capital	-	232	260

	66,874	68,507	86,351
Less: Supervisory deductions	(4,781)	(4,536)	(4,155)

Total regulatory capital	62,093	63,971	82,196

Risk-weighted (or equivalent risk-weighted) assets
Credit risk	416,500	404,100	433,400
Counterparty risk	82,000	53,000	61,100
Market risk	62,300	56,300	46,500
Operational risk	33,900	33,900	36,800

	594,700	547,300	577,800

Risk asset ratio
Core Tier 1	5.5%	6.4%	5.9%
Tier 1	8.0%	9.0%	9.9%
Total	10.4%	11.7%	14.2%

Risk asset ratio (statutory basis)
Core Tier 1	6.5%	7.0%	6.6%
Tier 1	8.8%	9.3%	10.0%
Total	11.3%	11.9%	14.1%

Risk and capital management (continued)

Capital (continued)

Capital resources and ratios (continued)

The components of the Group's regulatory capital resources, in accordance with FSA definitions, were as follows:

	30 September 2009	30 June 2009	31 December 2008
	£m	£m	£m

Composition of regulatory capital
Tier 1
Ordinary shareholders' equity	48,820	47,820	45,525
Minority interests	2,185	2,123	5,436
Adjustments for:
Goodwill and other intangible assets - continuing	(15,339)	(15,117)	(16,386)
Unrealised losses on available-for-sale debt securities	2,317	4,194	3,687
Reserves arising on revaluation of property and unrealised gains on available-for-sale equities	(145)	(25)	(984)
Reallocation of preference shares and innovative securities	(656)	(656)	(1,813)
Other regulatory adjustments	(711)	(263)	9
Less expected losses over provisions net of tax	(2,313)	(1,502)	(770)
Less securitisation positions	(1,187)	(1,397)	(663)

Core Tier 1 capital	32,971	35,177	34,041
Preference shares	11,313	11,207	16,655
Innovative Tier 1 securities	2,800	2,742	6,436
Tax on the excess of expected losses over provisions	922	599	308
Less deductions from Tier 1 capital	(388)	(329)	(316)

Total Tier 1 capital	47,618	49,396	57,124

Tier 2
Reserves arising on revaluation of property and unrealised gains on available-for-sale equities	145	25	984
Collective impairment allowances	850	744	666
Perpetual subordinated debt	4,230	4,094	9,079
Term subordinated debt	18,830	17,832	20,282
Minority and other interests in Tier 2 capital	11	11	11
Less deductions from Tier 2 capital	(4,810)	(3,827)	(2,055)

Total Tier 2 capital	19,256	18,879	28,967

Tier 3	-	232	260

Supervisory deductions
Unconsolidated investments	4,704	4,461	4,044
Other deductions	77	75	111

Total deductions other than from Tier 1 capital	4,781	4,536	4,155

Total regulatory capital	62,093	63,971	82,196

Risk and capital management (continued)

Credit risk

The key elements of the Group's credit risk management framework are detailed in the Group's 2008 Annual Report and Accounts.

Key developments in the year to date are:

The introduction of a new credit approval framework for wholesale credit, replacing credit committees with individual delegated authorities and requiring at least two individuals to approve each credit decision, one from the business and one from risk management. Both individuals must hold sufficient delegated authority. The level of authority is dependent on their experience and expertise, with only a small number of senior executives holding the highest authority granted under the framework.

Further refinement and embedding of the frameworks to manage the various dimensions of concentration risk: country, sector and single name.

Credit risk assets

Credit risk assets consist of loans and advances (including overdraft facilities), instalment credit, finance lease receivables and other traded instruments across all customer types. Reverse repurchase agreements and issuer risk are excluded.

	30 September 2009	30 June 2009
	£bn	£bn

UK Retail	101	98
UK Corporate	111	100
Wealth	16	14
Global Banking & Markets	257	264
Global Transaction Services	7	7
Ulster Bank	45	40
US Retail and Commercial	55	56
RBS Insurance	3	3

Core	595	582
Non-Core	157	156

	752	738

Key points:

Credit risk assets increased by £14 billion, 2% in the third quarter but on a constant currency basis, credit risk assets fell slightly.

Part of the growth in UK Corporate and decrease in Global Banking & Markets reflects migration of portfolios between these divisions.

Risk and capital management (continued)

Credit risk (continued)

Credit risk assets by asset quality band

Asset quality band	PD range	30 September 2009
		Core	Non-Core	Total		30 June 2009		31 December 2008
		£bn	£bn	£bn	%	£bn	%	£bn	%

AQ1	0% - 0.034%	138	24	162	21.5	162	22.0	208	24.3
AQ2	0.034% – 0.048%	18	3	21	2.8	24	3.3	30	3.5
AQ3	0.048% – 0.095%	26	6	32	4.3	33	4.5	45	5.3
AQ4	0.095% - 0.381%	95	17	112	14.9	119	16.1	159	18.6
AQ5	0.381% - 1.076%	111	28	139	18.5	126	17.1	157	18.4
AQ6	1.076% - 2.153%	84	18	102	13.6	102	13.8	107	12.5
AQ7	2.153% - 6.089%	40	12	52	6.9	52	7.0	48	5.6
AQ8	6.089% - 17.222%	22	5	27	3.6	26	3.5	26	3.0
AQ9	17.222% - 100%	13	9	22	2.9	17	2.3	12	1.4
AQ10	100%	16	23	39	5.2	34	4.6	19	2.2
Other (1)		32	12	44	5.8	43	5.8	44	5.2

		595	157	752	100.0	738	100.0	855	100.0

Note:
(1)	'Other' largely comprises assets covered by the standardised approach for which a probability of default (PD) equivalent to those assigned to assets covered by the internal ratings based approach is not available.

The asset quality analysis above reflects the negative migration of the portfolios, with a general declining trend in the higher quality bands and an increase in lower quality bands.

Credit risk assets by industry sector

	30 September 2009			30 June 2009	31 December 2008
	Core	Non-Core	Total
	£bn	£bn	£bn	£bn	£bn

Personal	165	22	187	184	198
Banking and financial institutions	145	19	164	152	180
Property	58	48	106	104	113
Transport and storage	35	16	51	50	59
Manufacturing	41	9	50	54	68
Technology, media, telecommunications	21	14	35	35	42
Wholesale and retail trade	27	4	31	32	35
Public sectors and quasi-government	25	3	28	25	40
Building	19	5	24	26	29
Natural resources and nuclear	15	5	20	20	25
Power, water and waste	14	5	19	20	27
Tourism and leisure	15	4	19	18	20
Business services	12	2	14	14	15
Agricultural and fisheries	3	1	4	4	4

	595	157	752	738	855

Generally stable trend across most sectors is not reflected in the Banking and financial institutions where the nature of the exposure, largely short term and affected by market factors, tends to result in a more volatile trends.

Risk and capital management (continued)

Credit risk (continued)

Credit risk assets by geography

	30 September 2009			30 June 2009	31 December 2008
	Core	Non-Core	Total
	£bn	£bn	£bn	£bn	£bn

United Kingdom	275	51	326	324	327
Western Europe (excluding UK)	142	50	192	182	226
North America	101	30	131	136	178
Asia & Pacific	35	10	45	41	56
Latin America	16	9	25	24	31
CEE & Central Asia	16	3	19	17	22
Middle East & Africa	10	4	14	14	15

	595	157	752	738	855

Outside the UK, changes in part reflect the effect of foreign currency exchange rate movements during the quarter.

Risk and capital management (continued)

Credit risk (continued)

Risk elements in lending

The following table shows the estimated amount of loans classified as non-accrual, accruing past due and potential problem loans. The data is stated before deducting the value of security held or related provisions.

	30 September 2009			30 June 2009	31 December 2008
	Core	Non-Core	Total
	£m	£m	£m	£m	£m

Loans accounted for on a non-accrual basis: (3)
- Domestic (1)	6,236	6,621	12,857	11,971	8,579
- Foreign (2)	3,607	15,338	18,945	15,258	8,503

	9,843	21,959	31,802	27,229	17,082

Accruing loans which are contractually overdue 90 days or more as to principal or interest: (4)
- Domestic (1)	1,446	1,046	2,492	2,444	1,201
- Foreign (2)	405	309	714	1,056	508

	1,851	1,355	3,206	3,500	1,709

Total risk elements in lending (REIL)	11,694	23,314	35,008	30,729	18,791

Potential problem loans: (5)
- Domestic (1)	181	424	605	273	218
- Foreign (2)	6	8	14	23	8

Total potential problem loans (PPLs)	187	432	619	296	226

Closing provisions for impairment as a % of:
REIL	56%	38%	44%	45%	50%
REIL and PPLs	55%	37%	43%	44%	50%

Risk elements in lending as a % of gross lending to customers excluding reverse repos	2.58%	14.61%	5.74%	5.01%	2.66%

Risk elements in lending and potential problem loans as a % of gross lending to customers excluding reverse repos	2.62%	14.88%	5.84%	5.08%	2.69%

Notes:
(1)	United Kingdom domestic transactions of the Group.
(2)	Transactions conducted through offices outside the UK and through those offices in the UK specifically organised to service international banking transactions.
(3)	All loans against which an impairment provision is held are reported in the non-accrual category.
(4)	Loans where an impairment event has taken place but no impairment recognised. This category is used for fully collateralised non-revolving credit facilities.
(5)	Loans for which an impairment event has occurred but no impairment provision is necessary. This category is used for fully collateralised advances and revolving credit facilities where identification as 90 days overdue is not feasible.

Risk and capital management (continued)

Credit risk (continued)

Impairment loss provision methodology

The impairment loss provision methodology is detailed in the 2008 Annual Report and Accounts.

Impairment charge

The following table shows total impairment losses charged to the income statement.

	Quarter ended					Nine months ended
	30 September 2009			30 June 2009	30 Sept 2008	30 Sept 2009	30 Sept 2008
	Core	Non-Core	Total	30 June 2009	30 Sept 2008
	£m	£m	£m	£m	£m	£m	£m

New impairment losses	1,266	2,127	3,393	4,738	1,329	11,054	2,946
Less: recoveries of amounts previously written off	(53)	(61)	(114)	(75)	(49)	(254)	(187)

Charge to income statement	1,213	2,066	3,279	4,663	1,280	10,800	2,759

Comprising:
Loan impairment losses	1,107	2,155	3,262	4,520	1,023	10,058	2,429
Impairment losses on available-for-sale securities	106	(89)	17	143	257	742	330

Charge to income statement	1,213	2,066	3,279	4,663	1,280	10,800	2,759

Analysis of loan impairment charge

	Quarter ended					Nine months ended
	30 September 2009			30 June 2009	30 Sept 2008	30 Sept 2009	30 Sept 2008
	Core	Non-Core	Total	30 June 2009	30 Sept 2008
	£m	£m	£m	£m	£m	£m	£m

Latent loss impairment charge	249	(13)	236	616	137	960	275
Collectively assessed impairment charge	572	463	1,035	1,008	636	3,038	1,576
Individually assessed impairment charge (1)	286	1,689	1,975	2,889	250	6,036	578

Charge to income statement	1,107	2,139	3,246	4,513	1,023	10,034	2,429

Charge as a % of customer loans and advances - gross (2)	0.99%	5.37%	2.14%	2.96%	0.64%	2.21%	0.51%

Notes:
(1)	Excludes loan impairment charges against loans and advances to banks for the quarter of £16 million (quarter ended 30 June 2009 - £7 million, 30 September 2008 - £nil million and nine months ended 30 September 2009 - £24 million and 30 September 2008 - £nil million).
(2)	Gross of provisions and excluding reverse repurchase agreements.

Risk and capital management (continued)

Liquidity risk

Global developments in 2009

Following a difficult first quarter, most indicators of stresses in financial markets are close to or better than before the collapse of Lehman Brothers in September 2008. Liquidity conditions in money and debt markets have improved significantly since the beginning of Q2 2009. Contributing to the improvement has been a combination of ongoing central bank and other official liquidity support schemes, guarantee schemes and rate cuts. Signs of improvement in underlying macroeconomic trends also helped to sustain a recovery in debt markets.

Important developments in central bank liquidity programmes since February include:

In the UK, the Bank of England reduced interest rates to 0.5% in March, and later the same month the Bank of England initiated 'quantitative easing' through its Asset Purchase Facility. Gilt purchases dominate activity to date, while direct purchases of commercial paper and corporate bonds have been relatively small.

In the US, the Federal Reserve has maintained its target for the funds rate at 0-0.25% while supplementing its credit-easing programmes with a new Term Asset-Backed Securities Loan Facility (TALF) although initial take up of the TALF has been slow.

In the Euro Area, the European Central Bank (ECB) decided in early May to hold three 1-year repo operations against its general collateral list. The first of these was received enthusiastically in June, resulting in significant supply of ECB liquidity to the banking system and bringing downward pressure on short term rates.

Following the economic and financial crisis, regulators across the world have continued to review their respective liquidity regulation. In particular the FSA published its new policy statement (PS09/16) at the beginning of October 2009. The new regulation will be phased in over a number of years with the first element covering systems and controls, effective 1 December 2009 and new reporting requirements being introduced during 2010. In addition the requirements for liquidity buffers will be introduced over a number of years recognising the position of the economic cycle and the potential for increased liquidity buffers, above the "back-stop" levels to impact the availability of credit. The Group has a program in place to address the new FSA requirements, with the Group to continue building its liquidity reserves together with reducing the customer funding gap.

Liquidity Policy

The policy of the Group is to ensure that it is able to meet its obligations as they fall due.

The Group has an approved risk appetite supported by explicit targets and metrics to control the size and extent of both short-term and long-term liquidity risk. The Group Asset and Liability Committee (GALCO), chaired by the Group Finance Director, has the responsibility to set Group policy and ensure that it is cascaded and communicated to the business divisions. Group Treasury is the functional area with responsibility for monitoring and control of the Group's funding and liquidity positions.

Group Treasury is supported by a governance process that includes a Liquidity Risk forum comprising functional areas across the organisation that are responsible for liquidity management, including monitoring through divisional and regional asset and liability committees.

Risk and capital management (continued)

Liquidity risk (continued)

Liquidity management

The Group's liquidity reserves at 30 September 2009 were £140 billion, up £19 billion compared to June 2009. The Group has increased the term of its wholesale funding to improve its liquidity position. The size of medium term note issuance increased from £104,190 million in June 2009 to £112,091 million in September 2009. The overall amount of wholesale funding has increased from £416,417 million to £437,882 million at September 2009. The Group has actively sought to manage its liquidity position through improving the short-term duration of wholesale funding, supplemented by long-term issuance, government guaranteed debt, and a program of ensuring our assets are eligible as collateral using central bank liquidity schemes.

Structural balance sheet management

Structural balance sheet management focuses principally on ensuring the gap between customer loans and customer deposits is maintained at a reasonable level to reduce the need for wholesale funding, and more importantly short-term wholesale funding. Through pro-actively focussing on customer deposit growth and de-leveraging initiatives, the Group aims to improve the structural balance sheet.

A key structural balance sheet measure for the Group is the Loans to deposits ratio (gross), and this has improved from 145% to 142% at September 2009. The gap between customer loans and customer deposits (excluding repos) improved by £14 billion from £178.0 billion as at 30 June 2009 to £164 billion as at 30 September 2009. The Group is continuing to develop diversified sources of funding across its retail, corporate and wholesale franchises in line with the strategy to rely more on retail and other customer funds to support its lending business.

Additional measures to improve the structural balance sheet have focused on reducing the size of the multi seller conduits business, down by £4.5 billion to £30.5 billion at 30 September 2009, which relies upon funding assets through the issuance of short term asset back commercial paper.

Stress testing

The Group uses stress tests as a tool to evaluate the impact of disrupted market conditions and specific events, to measure the impact both on and off balance sheet. The stress tests show the degree of resilience in times of stress and the ability for contingency actions to mitigate stressed conditions. The assumptions and nature of the risks driving the stress tests are refined and updated in light of changing conditions.

Contingency planning

Contingency plans developed to anticipate the potential for deterioration in market conditions and ensure that the Group can respond to adverse developments. The contingency plan considers actions including the use of liquid assets, reduction in lending commitments, and the use of collateral and management of derivative exposures.

Risk and capital management (continued)

Liquidity risk (continued)

Funding profile

In line with stated targets, the Group will seek to improve its liquidity position by attracting appropriate mix of customer deposits and wholesale funding;

	30 September 2009		30 June 2009		31 December 2008
	£m	%	£m	%	£m	%

Deposits by banks (1)	138,584	16.1	135,601	16.3	178,943	18.8

Debt securities in issue:
Commercial paper	45,508	5.3	49,270	5.9	69,891	7.3
Certificates of deposits	79,305	9.2	76,095	9.2	73,925	7.8
MTNs	112,091	13.0	104,190	12.5	94,298	9.9
Other (bonds)	12,440	1.4	4,394	0.5	14,231	1.5
Securitisations	16,869	2.0	14,761	1.8	17,113	1.8

	266,213	30.9	248,710	29.9	269,458	28.3

Subordinated debt	33,085	3.8	32,106	3.9	43,678	4.6

Total wholesale funding	437,882	50.8	416,417	50.1	492,079	51.7
Customer deposits (1)	423,769	49.2	415,267	49.9	460,318	48.3

Total	861,651	100.0	831,684	100.0	952,397	100.0

Note:

(1) Excluding repurchase agreements and stock lending.

The mix of funding has remained relatively unchanged from June 2009 to September 2009. Increases in customer deposits of £8,502 million and wholesale funding of £21,465 million resulted in a slightly larger proportion of wholesale funding of 50.8% compared to 50.1% for June 2009. The Group manages actively the funding profile through targeting of structural funding measures such as loans to deposits gaps and also through its liquidity management.

Deposits by banks

The short term debt markets have improved markedly over the course of 2009 and the Group has been able to readily access this source of funding with improved maturities and reduced costs of spread. This easing of market conditions has enabled the Group to significantly reduce reliance on central bank facilities.

Risk and capital management (continued)

Liquidity risk (continued)

Debt securities in issue and subordinated liabilities

The proportion of outstanding debt instruments issued, with a remaining maturity of greater than 12 months, has decreased from 46.8% at 30 June 2009 to 45.7% at 30 September 2009. The outstanding amount with a maturity greater than 12 months has increased from £131,551 million at June 2009 to £136,871 million at 30 September reflecting the increased term funding issuances over the period.

	30 September 2009				30 June 2009		31 December 2008
	Debt securities in issue	Sub- ordinated debt	Total
	£m	£m	£m	%	£m	%	£m	%

Less than one year	159,296	3,131	162,427	54.3	149,265	53.2	172,234	55.0
1-5 years	70,458	4,769	75,227	25.1	67,390	24.0	61,842	19.8
More than 5 years	36,459	25,185	61,644	20.6	64,161	22.8	79,060	25.2