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| Version 2 | Version 3 |
|---|---|
| RBS 'clean-up' to push it into 2015 loss | RBS 'clean-up' to push it into 2015 loss |
| (35 minutes later) | |
| A "clean-up" plan announced by RBS is set to hit annual profit by £2.5bn and will push it into a loss for 2015. | A "clean-up" plan announced by RBS is set to hit annual profit by £2.5bn and will push it into a loss for 2015. |
| In a statement, the taxpayer-backed bank said it was setting aside another £500m to pay for PPI and £1.5bn for bad housing debts in the US. | In a statement, the taxpayer-backed bank said it was setting aside another £500m to pay for PPI and £1.5bn for bad housing debts in the US. |
| In addition, it will write down £498m from its private bank Coutts. | In addition, it will write down £498m from its private bank Coutts. |
| "I am determined to put the issues of the past behind us and make sure RBS is a stronger, safer bank," chief executive Ross McEwan said. | "I am determined to put the issues of the past behind us and make sure RBS is a stronger, safer bank," chief executive Ross McEwan said. |
| "We will now continue to move further and faster in 2016 to clean up the bank and improve our core businesses." | "We will now continue to move further and faster in 2016 to clean up the bank and improve our core businesses." |
| The bank is also speeding up a plan to make payments into its pension fund to help deal with the deficit. | |
| RBS is 73% owned by the government as a result of a bailout during the financial crisis. | RBS is 73% owned by the government as a result of a bailout during the financial crisis. |
| The bank is due to announce its results on 26 February. It has not made an annual profit for seven years. | The bank is due to announce its results on 26 February. It has not made an annual profit for seven years. |
| Shares in RBS fell more than 5% in early trading, but then recovered somewhat to trade down by only 1.6%. | |
| Analysis: Kamal Ahmed, BBC economics editor | Analysis: Kamal Ahmed, BBC economics editor |
| When you are about to sell the house, it's always worth a good clean up before potential customers arrive for a poke around. | When you are about to sell the house, it's always worth a good clean up before potential customers arrive for a poke around. |
| That's what's happening at RBS and is what this morning's announcement is all about. George Osborne, the chancellor, is keen to off-load the government's 73% stake in the bank over the course of this Parliament. | That's what's happening at RBS and is what this morning's announcement is all about. George Osborne, the chancellor, is keen to off-load the government's 73% stake in the bank over the course of this Parliament. |
| Ross McEwan is clear today that he wants to put "legacy issues" behind the bank. That's shorthand for the collapse of the bank in 2008. | Ross McEwan is clear today that he wants to put "legacy issues" behind the bank. That's shorthand for the collapse of the bank in 2008. |
| The largest of those are the legal actions in the US connected to the failure of mortgage products. | The largest of those are the legal actions in the US connected to the failure of mortgage products. |
| RBS's share price, at around 260p, is still a long way from 502p, considered to be the "in price" the government paid for its stake. The share price has sunk by 30% in the last year. | RBS's share price, at around 260p, is still a long way from 502p, considered to be the "in price" the government paid for its stake. The share price has sunk by 30% in the last year. |
| Clean up, yes, but investors will need to see an improved performance from the bank before that share price starts rising again. | Clean up, yes, but investors will need to see an improved performance from the bank before that share price starts rising again. |
| On a conference call Mr McEwan refused to answer questions about what the measures meant for the sale of the government's stake in the bank. | On a conference call Mr McEwan refused to answer questions about what the measures meant for the sale of the government's stake in the bank. |
| But he said that he thought the bank's provisions for mis-selling PPI were now over. | But he said that he thought the bank's provisions for mis-selling PPI were now over. |
| "Based on what we know today, hopefully this is the final provision. Hopefully it is the end... this is it," he said. The bank's total costs for the scandal are now £4.3bn. | "Based on what we know today, hopefully this is the final provision. Hopefully it is the end... this is it," he said. The bank's total costs for the scandal are now £4.3bn. |
| The PPI policies were supposed to protect people against loss of income or sickness, but were often inappropriate. Across the industry, more than £20bn has been paid to more than 10 million consumers. | |
| In terms of the money set aside for litigation concerning bad US housing debt, it is the last major player not to have settled. Alex Potter from Mirabaud Securities said the amount was lower than had been feared and that it indicated a formal settlement was probably imminent. | |
| But analysts at Citigroup warned that this was not the end of the matter for RBS. | |
| "We still see significant additional litigation charges in 2016, on top of the charges that have been announced today," the bank said in a research note. | |
| In addition, it expects earnings to be hit by the introduction of the UK bank tax as well as continued low interest rates, because this affects its ability to profit from assets. | |
| Citigroup added that the PPI charges had negative implications for Lloyds, the bank that has paid out the most for the scandal so far. |