Royal Bank of Scotland has plunged to a loss in the first three months of the year, weighted down by £856m of conduct and litigation charges.
The 79%-taxpayer owned bank prepared the way for further penalties for foreign exchange rigging – including possible criminal charges – by setting aside a further £334m for manipulation of the £3.5tn-a-day global currency markets. The cost comes on top of the translatlantic settlement with major banks in November when a record £2.6bn of fines were levied on major players in the market.
The Edinburgh-based bank said in a statement that it was still in discussions with governments and regulatory authorities about its forex dealings.
“These include advanced settlement discussions regarding the criminal investigation being conducted by the [US department of justice] and with certain other financial regulatory authorities and RBS expects that it will incur financial penalties in conjunction with any such settlements.”
Other elements of the £856m of conduct charges included a £100m top-up to the ongoing cost of compensation for PPI mis-selling. Around £257m is to cover mis-selling of packaged bank accounts.
The cost of scandals along with restructuring costs of £453m drove the bank to a £446m loss, compared with a £1.2bn profit the same time a year ago.
The new cost represents a blow to RBS boss Ross McEwan, who has embarked on a radical overhaul of the bank since taking the helm in October 2013. He has warned of substantial job cuts.
He warned more conduct-related issues would hit the back later this year, adding that RBS faced “another tough year” amid restructuring in the UK and the Republic of Ireland.
“I look forward to the day we can focus on the future rather than on legacy issues.”
In February he declared “the end of a standalone investment bank at RBS” as he announced plans to restrict operations to 13 countries – compared with 38 at the end of last year and 51 in 2009 – just after it was bailed out with £45bn of taxpayer funds.
The bank said it was no longer subject to a deferred prosecution agreement with the US authorities put in place the time of its £390m Libor-rigging fine in February 2013.
The bank has not made a full-year profit since its bailout in 2008. Last year was its seventh consecutive year in the red, taking total losses to more than £43bn since the taxpayer rescue.
This article was written by Jill Treanor, for theguardian.com on Thursday 30th April 2015 08.06 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010