RBS bank slides into loss on US litigation charges
LONDON:
Britain’s state-rescued Royal Bank of Scotland slid into the red in the third quarter on US litigation and companywide restructuring costs, it said yesterday. Chief executive Ross McEwan meanwhile voiced caution over the potential impact of Brexit on the bank. RBS made a loss after tax of £469 million ($570 million) in the three months to September 30 compared with one year earlier, when it posted a net profit of £940 million thanks to the sale of US bank Citizens.
Meanwhile, litigation and conduct costs of £425 million for the third quarter included a charge linked to a heavy fine in the United States, RBS said in a statement. Royal Bank of Scotland recently agreed a fine of $1.1 billion with US authorities over the alleged mis-selling of mortgage securities ahead of the 2008 financial crisis that triggered a state bailout of the Edinburgh-based lender. Much of the underlying lending was worthless or fraudulent, delivering billions of dollars in losses to holders of the mortgage bonds when the housing market collapsed, bringing down numerous banks. The US Department of Justice last month ordered Deutsche Bank to pay a $14 billion fine over its role in the subprime mortgage crisis - sparking fears it may have to raise fresh capital. A source told AFP in late September that the German bank was in talks with the DoJ to reduce its fine to about $5.4 billion, while the bank’s chief financial officer Markus Schenck on Thursday said discussions on reaching a final settlement were “ongoing”.
Missed Deadline
Royal Bank of Scotland, which remains 73-percent owned by the British taxpayer, added on Friday that it will miss a 2017 deadline for the sale of its Williams & Glyn unit. This comprises around 300 RBS branches that the EU has ordered to be offloaded as a condition of the lender winning a £45-billion government bailout nearly a decade ago - the world’s biggest. Since the rescue, RBS has racked up losses of more than £50 billion. RBS, under the leadership of chief executive McEwan, launched a massive overhaul in 2015 that slashed the bank’s investment banking activities and axed thousands of jobs.