One last heave stateside and RBS return to normality looms

Comment Martin Flanagan

business, suggests strongly that 2017 will be the last year of financial pain.

The “waiting for Godot”-style judgement of the US Department of Justice on RBS’ mis-selling of flaky mortgage-backed securities in the sub-prime meltdown is expected before the end of the year, and the fines are likely to tumble the bank into its tenth year of losses.

But that should be it, finito. The taxpayer is still sitting on a 72 per cent stake in the Scottish bank, and it is increasingly obvious that the state will never get back all or even most of its money from the bailout.

But in the greater scheme of things we should be prepared to take that one on the chin. Given that we came within a whisker of some British banks not being able to distribute money from cashpoints in the crash, and the possible social panic that might have triggered, there is no doubt that the UK taxpayer bailouts of RBS, Lloyds, Northern Rock and Bradford & Bingley were correct.

It is something for which we should thank Gordon Brown. The former PM called it right. But it is better for society now that after this year’s losses RBS is allowed to throw off the government shackles and get back to being one of Britain’s Big Four. Given the pretty much savagely streamlined Natwest Markets investment banking business, RBS also has more limited exposure than its rivals to the UK banking consequences of Brexit. Chief executive Ross Mcewan says RBS will just use its Dutch banking licence – ironically acquired as part of the more historically cavalier bank’s acquisition of ABN Amro in the run-up to the financial crash – to provide services for its professional customers in the EU.

That unit, Mcewan estimates, would only need up to 150 staff to operate successfully, no doubt a mixture of local talent and British staff prepared to make the move. Still no profit and no divi is not a case for celebration. But American fines aside, RBS finally looks on the cusp of normalisation next year, and honest relief would not be excessive.