After extensive discussion regarding the future of the Royal Bank of Scotland's (RBS) sponsorship in Formula One it has finally being announced that it is to pull out of Formula One, but only after completing its current contract with the Williams F1 which finishes at the end of the 2010 season.

RBS has, like many other finance institutions, suffered under the credit crunch. This has seen RBS receive government funding and as a result a decision has been made to end its involvement with Formula One as part of a wider strategic review of its sponsorship arrangements. It came under criticism over using this government funding to pay for sponsorship. RBS has joined companies like ING in withdrawing their sponsorship of Formula One.

RBS has confirmed that it will stick to its commitment to be a team sponsor until the end of 2010. Despite this RBS is still looking at reducing costs by reducing some of the costs of their sponsorship marketing. The bank intends to cut its spending on hospitality by 90% this year and have cancelled trackside advertising for 2010.

RBS has another two years in a three year agreement that was signed with the Williams team in 2007. Williams team head Frank Williams said: "RBS has been a great partner for this team and we are pleased to have made our contribution over the past four years to developing the RBS brand internationally. Thanks to the support of RBS and our many other loyal partners, we are in a strong position to ride out the inevitable challenges of 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. In the last three years, Williams has spent over £100 million with 2700 UK suppliers and it is of course important that this business endures."

Andrew McLaughlin, RBS group director, Communications, added: "We recognise that we are now operating in a very different economic environment and have been reviewing all of our activities since October. It is imperative that we respond to the reality of the situation 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.

"Throughout our relationship, Williams have shown great understanding and innovation in driving the programme forwards. They have been very supportive in finding ways to reduce costs over the remainder of our contract. This early announcement allows Sir Frank Williams and his team to plan ahead financially."

Despite the withdrawal of this funding Williams F1 CEO Adam Parr still feels that the team has a 'positive' future for his team. The loss of such a major team is not ideal but with Formula One making major efforts to reduce costs and the team having a strong portfolio of sponsors the situation is not the end of the world.

As for whether Williams future was bright with the cost cutting measures and the rule changes even with the loss of RBS Parr, when asked by autosport.com, said: "I do, although I know it is very difficult to paint a positive picture at the moment.

"What you have to think about is this - when I came into the sport a few years ago, I was sitting across from people (in team principals' meetings) who said money does not matter to us. Now, we don't have discussions like that any more.

"In order for Williams to be competitive and be in the frame for the past two or three years, we have had to spend beyond our means. For the next two years we will not do that, and we will be paying off a significant chunk of debt. We are (now) seeing a scenario where our means are not dissimilar to the rest of F1."

For Parr it did not come as a total surprise that RBS would withdraw their sponsorship given the bank's financial problems.

Parr added: "Obviously it isn't good news for the sport that someone like RBS is withdrawing. From our point of view we have suspected for some time there was only a slim chance of them continuing beyond their current sponsorship term, and that is the end of 2010.

"The important thing for us is that the board confirmed to us yesterday and confirmed publicly today that they will honour the contract until 2010."

Even with the loss of several team sponsors Parr is comforted by the fact that several others have extended and even increased their level of sponsorship.

"We had 10 of our partners renew with us," said Parr. "Four of those partners that renewed or extended with us were major upgrades, and they at least doubled their investment 2009 compared to 2008.

"So, from a sponsorship revenue side, we came out pretty well year-on-year. The FOM revenues (television rights money) are stronger this year compared to last year, and we have significant cost savings coming through as a result of limited testing and a reduction in engine costs. As an example we are planning on using 20 engines compared to 55 last year.

"Overall we've got a very solid budget for this year. I don't want to claim to you it is everything we would like, but we are in advanced negotiations to bring new partners to the team for this season."

As for the future Parr was confident that there were other companies who had the potential to become major sponsors of Williams in the future.

"We have a budget for this season and it is reasonable budget. For 2010 the position is similar and 90 percent of the budget for this year is contracted for that year. And there will be further cost savings...I am confident that in time for 2011 we will have a very strong portfolio of sponsors in place. We have a broad range of partners and no individual partner is make or break for this team."