The sudden announcement came on Friday after the bank, which is 73% owned by the taxpayer, had said earlier in the day that a decision would not be made immediately to reduce its standard variable rate (SVR) from 4%.
The Bank’s rate cut and package of other measures is intended to counter a downturn in the economy following the Brexit vote.
RBS also revealed on Friday that it had incurred losses of £2bn in the first half of 2016, and Ross McEwan, the bank’s chief executive, said that a decision about the interest rate cut had not yet been made.
A committee needed to meet next week to take the decision, he said.
A few hours later, however, he said tthe bank’s SVR would be cut to 3.75% – after insisting that it was already lower than many rivals – and tried to play down the significance of any cut by saying most of its mortgage customers were on fixed rates.
The bank did not make any announcement about its savings rates, but McEwan said that cuts “hit savers every time”.
The bank, which also owns NatWest, is now on course for its ninth consecutive year of losses, which have reached £52bn since it was bailed out in 2008.
The results, which involve a string of legal issues, including compensation for the mis-selling of payment protection insurance, contained a warning about the effect of the 23 June referendum on the bank’s ability to meet its targets for cutting costs and generating returns for shareholders.
RBS has abandoned plans that were already stalled for a stock market flotation of the 300 Williams & Glyn branches it must sell to comply with EU rules associated with its £45bn taxpayer bailout. After spending £1.5bn on trying to separate the branches, the bank will now seek a trade sale. Santander is thought to have tabled an offer for the operation, which employs 5,500 people.
The £2bn loss compares with a £179m loss a year ago, and is in part caused by a decision to repay £1.1bn to the government. There were £1.3bn of new charges, including more than £400m for PPI, and also the costs of claims being brought by shareholders in relation to the bank’s 2008 cash call, and an investigation into tracker mortgages at its Ulster Bank.
RBS said a mediation attempt with shareholders over the cash call at 200p a share in 2008, before its bailout, had taken place on 26 and 27 July but had not reached a conclusion.
A long-running investigation in the US involving the way it sold mortgage bonds in the run-up to the 2008 crisis – which analysts estimate could cost £8bn – is ongoing, and settlement talks are under way with the state of Connecticut. Cases with the Department of Justice remain outstanding.
A year ago, the government used the half-year results to sell off its first tranche of shares at 330p a share, representing a £1bn loss. The shares fell 4% to 184p as the results were published, well below the 502p average price per share at which the taxpayer bought its stake.
This article was written by Jill Treanor, for theguardian.com on Friday 5th August 2016 15.29 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010