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| Version 4 | Version 5 |
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| RBS plans move to Amsterdam for post-Brexit EU hub | RBS plans move to Amsterdam for post-Brexit EU hub |
| (6 months later) | |
| Bank reports first half-year profit for three years but says it is being investigated for possible money laundering rule breaches | |
| Jill Treanor | |
| Fri 4 Aug 2017 07.44 BST | |
| Last modified on Mon 27 Nov 2017 19.00 GMT | |
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| Royal Bank of Scotland is considering using Amsterdam as its post-Brexit EU hub and has revealed it is being investigated for potential breaches of money laundering rules. | Royal Bank of Scotland is considering using Amsterdam as its post-Brexit EU hub and has revealed it is being investigated for potential breaches of money laundering rules. |
| The the 71% taxpayer-owned bank made the announcements as it reported its first half-year profit for three years. The £939m profit compares with a £2bn loss a year ago, although the chief executive, Ross McEwan, warned a full-year loss was likely, which would be the 10th consecutive year of annual losses since its 2008 bailout. | The the 71% taxpayer-owned bank made the announcements as it reported its first half-year profit for three years. The £939m profit compares with a £2bn loss a year ago, although the chief executive, Ross McEwan, warned a full-year loss was likely, which would be the 10th consecutive year of annual losses since its 2008 bailout. |
| The bank signalled that more jobs could be cut on top of the 14,200 – about 15% of the workforce – which have gone in the last 12 months. These job losses reduced costs which helped boost profits, as did a better performance at its investment banking business, NatWest Market. | The bank signalled that more jobs could be cut on top of the 14,200 – about 15% of the workforce – which have gone in the last 12 months. These job losses reduced costs which helped boost profits, as did a better performance at its investment banking business, NatWest Market. |
| The Amsterdam office is for the NatWest Markets arm, and advanced discussions are under way with the Dutch national bank. RBS already holds a banking licence in the Netherlands – a legacy of its takeover of the Dutch bank ABN Amro – and needs to beef up its presence there to “minimise disruption to the business” after Brexit. | The Amsterdam office is for the NatWest Markets arm, and advanced discussions are under way with the Dutch national bank. RBS already holds a banking licence in the Netherlands – a legacy of its takeover of the Dutch bank ABN Amro – and needs to beef up its presence there to “minimise disruption to the business” after Brexit. |
| The operation could need 150 people, RBS said, although it may not be necessary to move all staff from London. The cost of setting up the hub will be in the “tens of millions”. | The operation could need 150 people, RBS said, although it may not be necessary to move all staff from London. The cost of setting up the hub will be in the “tens of millions”. |
| Meanwhile, the news of the investigation into potential breaches of money laundering rules was contained in the more than 15 pages of legal warnings attached to the results. | Meanwhile, the news of the investigation into potential breaches of money laundering rules was contained in the more than 15 pages of legal warnings attached to the results. |
| “On 21 July 2017, the FCA [Financial Conduct Authority] notified RBS that it is undertaking an investigation into RBS plc’s compliance with the money laundering regulations 2007 in relation to certain customers. RBS is cooperating with the investigation,” the bank said, without providing further details. | “On 21 July 2017, the FCA [Financial Conduct Authority] notified RBS that it is undertaking an investigation into RBS plc’s compliance with the money laundering regulations 2007 in relation to certain customers. RBS is cooperating with the investigation,” the bank said, without providing further details. |
| There was a separate disclosure about a previously announced investigation into allegations that Britain’s banks processed vast amounts of tainted money from Russian criminals. | There was a separate disclosure about a previously announced investigation into allegations that Britain’s banks processed vast amounts of tainted money from Russian criminals. |
| But McEwan said: “Our path to sustainable profitability is becoming clearer and closer and we have resolved some of the most significant issues this bank faced.” | But McEwan said: “Our path to sustainable profitability is becoming clearer and closer and we have resolved some of the most significant issues this bank faced.” |
| He added: “It does feel this business is seeing the light at the tunnel,” but said the one major outstanding issue was settlement with the US Department of Justice over the sale of toxic mortgage bonds a decade ago. He hopes for a resolution before the end of the year. | He added: “It does feel this business is seeing the light at the tunnel,” but said the one major outstanding issue was settlement with the US Department of Justice over the sale of toxic mortgage bonds a decade ago. He hopes for a resolution before the end of the year. |
| Sir Howard Davies, the bank’s chairman, is among senior figures in Brexit discussions with the government. Davies said there was now a recognition of the potential for “some quite serious consequences for London which could happen in a very rapid and unplanned way if we don’t get some transition agreements”. | Sir Howard Davies, the bank’s chairman, is among senior figures in Brexit discussions with the government. Davies said there was now a recognition of the potential for “some quite serious consequences for London which could happen in a very rapid and unplanned way if we don’t get some transition agreements”. |
| He said the bank had just started to detect “signs of hesitancy” among corporate customers, especially manufacturers. “We’re seeing people sitting on their hands a bit,” he said. On Thursday, the governor of the Bank of England, Mark Carney, said Brexit was starting to affect business decisions. | He said the bank had just started to detect “signs of hesitancy” among corporate customers, especially manufacturers. “We’re seeing people sitting on their hands a bit,” he said. On Thursday, the governor of the Bank of England, Mark Carney, said Brexit was starting to affect business decisions. |
| But McEwan said the results demonstrated a reason to own RBS shares, which is important if the chancellor, Philip Hammond, is to be able to sell off any more on top of the 5% stake sold in August 2015 at a £1bn loss. | But McEwan said the results demonstrated a reason to own RBS shares, which is important if the chancellor, Philip Hammond, is to be able to sell off any more on top of the 5% stake sold in August 2015 at a £1bn loss. |
| McEwan said the decision to sell was the government’s and Hammond has previously cited the DoJ settlement as an impediment to a sale but also signalled that the shares could be sold at a loss. | McEwan said the decision to sell was the government’s and Hammond has previously cited the DoJ settlement as an impediment to a sale but also signalled that the shares could be sold at a loss. |
| The Treasury repeated a statement that it would “continue to seek opportunities for disposals, but the need to resolve legacy issues makes it uncertain as to when these will occur.” | The Treasury repeated a statement that it would “continue to seek opportunities for disposals, but the need to resolve legacy issues makes it uncertain as to when these will occur.” |
| It added: “There is still work to do but RBS is continuing to implement its strategy and is making good progress in dealing with the problems of the past.” | It added: “There is still work to do but RBS is continuing to implement its strategy and is making good progress in dealing with the problems of the past.” |
| Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said that until mistakes of the past were resolved “all the good work that RBS has done will continue to get lost in the noise”. | Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said that until mistakes of the past were resolved “all the good work that RBS has done will continue to get lost in the noise”. |
| “The core businesses are delivering steady income growth thanks to growing activity and costs look to be falling,” said Hyett. | “The core businesses are delivering steady income growth thanks to growing activity and costs look to be falling,” said Hyett. |
| RBS shares closed at 261.2p, up 1.9% but still well below the average price per share of 502p during its bailout in 2008 and 2009. | RBS shares closed at 261.2p, up 1.9% but still well below the average price per share of 502p during its bailout in 2008 and 2009. |
| Royal Bank of Scotland | |
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| European Union | |
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