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Royal Bank of Scotland sees more losses in third quarter | Royal Bank of Scotland sees more losses in third quarter |
(about 1 hour later) | |
Royal Bank of Scotland has reported a £469m loss for the July-to-September period as "legacy issues" continue to overshadow its performance. | Royal Bank of Scotland has reported a £469m loss for the July-to-September period as "legacy issues" continue to overshadow its performance. |
The bank received a £45.5bn bailout during the financial crisis and has been tackling a range of problems. | The bank received a £45.5bn bailout during the financial crisis and has been tackling a range of problems. |
But once restructuring costs and provision for litigation were excluded, the bank made an adjusted quarterly operating profit of £1.3bn. | But once restructuring costs and provision for litigation were excluded, the bank made an adjusted quarterly operating profit of £1.3bn. |
It said it could not sell its Williams & Glyn bank by the end of 2017. | It said it could not sell its Williams & Glyn bank by the end of 2017. |
RBS has been ordered by the European Commission to sell Williams & Glyn in order to prevent the group from having too dominant a position as the UK's largest lender to small businesses. | RBS has been ordered by the European Commission to sell Williams & Glyn in order to prevent the group from having too dominant a position as the UK's largest lender to small businesses. |
Earlier this week, Clydesdale Bank confirmed that it had made an offer for Williams & Glyn after Santander abandoned plans to buy the business. | Earlier this week, Clydesdale Bank confirmed that it had made an offer for Williams & Glyn after Santander abandoned plans to buy the business. |
RBS declined to comment on Clydesdale's statement, saying only that it was "talking to a number of interested parties". | RBS declined to comment on Clydesdale's statement, saying only that it was "talking to a number of interested parties". |
However, RBS said it did not expect to expect to sell off the business by 31 December 2017, as the Commission requires. | |
RBS has already missed an earlier deadline for the sale, of November 2013, without incurring any punitive action by the Commission. | |
Litigation costs | Litigation costs |
RBS is still 73% owned by the government following its emergency bailout in 2008. | |
Its latest attributable or "bottom-line" loss was widened by restructuring costs of £469m and conduct and litigation costs of £425m, as well as a deferred tax write-off of £300m. | |
The third-quarter loss compares badly with the same period last year, when RBS posted a profit of £940m. But that was flattered by proceeds from the sale of US bank Citizens. | The third-quarter loss compares badly with the same period last year, when RBS posted a profit of £940m. But that was flattered by proceeds from the sale of US bank Citizens. |
Unlike Lloyds and Barclays earlier this week, RBS has made no new provision for costs arising from mis-selling of Payment Protection Insurance (PPI). | Unlike Lloyds and Barclays earlier this week, RBS has made no new provision for costs arising from mis-selling of Payment Protection Insurance (PPI). |
The new litigation costs have been set aside in readiness for expected liabilities in the US, where the bank faces charges in relation to the sale of mortgage-backed securities in the run-up to the financial crisis. | The new litigation costs have been set aside in readiness for expected liabilities in the US, where the bank faces charges in relation to the sale of mortgage-backed securities in the run-up to the financial crisis. |
'Noisy' results | 'Noisy' results |
RBS said these were among "a range of uncertainties in the external environment". | RBS said these were among "a range of uncertainties in the external environment". |
RBS chief executive Ross McEwan said: "We've said that 2015 and 2016 would be noisy as we work through legacy issues and transform this bank for customers. These results reflect that noise. | RBS chief executive Ross McEwan said: "We've said that 2015 and 2016 would be noisy as we work through legacy issues and transform this bank for customers. These results reflect that noise. |
"Our core business results were good, with a £1.3bn adjusted operating profit, our best quarter since 2014. | "Our core business results were good, with a £1.3bn adjusted operating profit, our best quarter since 2014. |
"The core business has now delivered on average over £1bn in adjusted operating profit for the last seven quarters." | "The core business has now delivered on average over £1bn in adjusted operating profit for the last seven quarters." |
RBS said it had achieved cost reductions of £695m in the first nine months of the year and was on target to meet its target of an £800m reduction by the end of this year. | RBS said it had achieved cost reductions of £695m in the first nine months of the year and was on target to meet its target of an £800m reduction by the end of this year. |
"RBS has yet to emerge from the weight of misconduct fines, restructuring costs, the distraction of the sale of the Williams & Glyn unit, the spectre of the government stake and the lack of a dividend payment," said Richard Hunter, head of equities at Wilson King Investment Management. | |
"Meanwhile, the bank's longer term targets have also been temporarily shelved in the face of its ongoing challenges." |