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By Alan Baldwin
LONDON, Feb 25 (Reuters) - Royal Bank of Scotland (RBS) will end its sponsorship of the Williams Formula One team when the current deal expires in 2010, the troubled bank said on Wednesday.
RBS, now majority-owned by the British government, is due to report Britain’s biggest ever corporate loss on Thursday as well as a restructuring plan and job losses.
“We recognise that we are now operating in a very different economic environment and have been reviewing all of our activities since October,” RBS head of communications Andrew McLaughlin said in a statement.
“It is imperative that we respond to the reality of the situation that we face and that we do so in an orderly way that respects the commercial agreements we have in place and the implications for our partners and the jobs they support.”
The bank have sponsored former champions Williams since 2005 and renewed their deal for a second three-year term in 2007. They also back tennis player Andy Murray and renewed their sponsorship of the Six Nations rugby tournament through to 2013 last month.
RBS said they expected to halve their sponsorship costs by 2010 and had already cancelled Formula One trackside advertising for 2010.
It added that across all RBS sponsorships, hospitality costs this year had been reduced by around 90 percent.
Williams are the only Formula One team not owned by a billionaire or a manufacturer and since the end of last season the Toyota-powered team have lost sponsorship from companies in the Icelandic Baugur group, Lenovo and Petrobras.
However 10 other partners have renewed or upgraded deals and team founder Frank Williams said the team was well placed to ride out the next two years.
“RBS is showing great responsibility to the role that we play in the British economy, supporting over 500 highly skilled technology jobs in a sector in which Britain leads the world,” he said.
“Williams has spent over 100 million pounds ($142.9 million) with 2,700 UK suppliers and it is of course important that this business endures.”
The team’s chief executive Adam Parr said the RBS funding made up around 10 percent of the team’s annual budget but added that a reported figure of 20 million pounds a year was “way too high”.
“Obviously it isn’t good news for the sport that a major sponsor, not just of us but also through circuit signage etc, like RBS should announce it is withdrawing,” he told a conference call.
“The important thing is that the board are confirming that they will honour the contract through 2010.”
Parr said significant cost-saving measures for 2009 would help, with the team planning on using 20 engines this year compared to 55 in 2008.
“We’ve got a very solid budget for this year,” he added. “For 2010 the picture is very similar.
Parr added that “no individual sponsor is make or break for this team” and was hopeful that Williams could find a replacement despite the credit crunch and other teams also losing sponsors.
Renault’s title sponsor ING has already announced it is withdrawing at the end of 2009, leaving a considerable hole in that team’s finances.
Editing by Miles Evans