Next year it will be a decade since Royal Bank of Scotland embarked on its near-fatal acquisition of the worst pieces of Dutch bank ABN Amro.
So, you might think, the clean-up operation must be in the final stages. Surely it can be only be a matter of putting out of the final bags of rubbish and removing the last few scratches. Normalisation, to use RBS’s word, must be in view.
Not exactly. As RBS recorded an eighth year in a row of losses, there was a sense of weary familiarity about it all. Williams & Glyn, the 300-branch network that must be removed on the orders of the European commission, is still hanging around being “complex”.
When Brussels made its state-aid ruling in 2009, extraction was expected to take four years. Now RBS says this “top priority” will not be achieved by the revised deadline of the first quarter of next year. Instead it is “committed” to the end of next year, which is not quite the same thing as saying separation will definitely happen by then.
Unfortunately, there is no chance of handing any excess capital to shareholders while W&G is still in the stable. That is one reason why the shares fell 9% to a new three-year low on Friday morning.
Another contributor was lack of news on the settlement with US authorities on the sale of mortgage-backed securities. The timing on that one is entirely outside RBS’ control, but it’s a multi-billion uncertainty. The hit could be £2bn but might be £6bn.
In the meantime, the restructuring of RBS goes on and on. The bill this year will be £1bn, part of an expected £5bn in the 2015-19 period. When your “one-offs” are really regular occurrences, you’d prefer the underlying business to be moving swiftly forwards. In RBS’s case “adjusted” operating profits fell from £6bn to £4.4bn in 2015.
To complete the sense of familiarity, we even had a sight from the Stephen Hester era – the chief executive giving up a portion of his pay to try defuse a row. Ross McEwan is handing half his £1m role-based allowance to charity. Why? Presumably because RBS is embarrassed by the table in the annual report that shows McEwan earning more last year than Hester ever did.
To be fair to McEwan and RBS, it’s hard to point to anything strategic they should be doing differently. It’s just an extremely hard graft. Let’s give some credit. McEwan has abolished “teaser” rates on credit cards, setting an honourable example that no other major bank has followed. It all helps in the slow and ill-defined process of rebuilding “trust”. But the overwhelming sense on the part of shareholders – that’s still us, to the tune of 73% – is that the end is not nigh, unfortunately.
This article was written by Nils Pratley, for theguardian.com on Friday 26th February 2016 11.10 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010