This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.guardian.co.uk/business/2012/may/04/rbs-loss-recovery-milestones-bank

The article has changed 4 times. There is an RSS feed of changes available.

Version 1 Version 2
RBS reports £1.4bn loss but hails 'recovery milestones' RBS reports £1.4bn loss but hails 'recovery milestones'
(about 6 hours later)
Royal Bank of Scotland has played down any imminent sell off of the government's 83% stake in the bank even as it hailed the achievement of "important recovery milestones" . Royal Bank of Scotland has played down the likelihood of any imminent sell-off of the government's 83% stake, even as it hailed the achievement of "important recovery milestones".
The bank, 83% owned by the taxpayer, signalled that it was ready to resume payments to bond holders – which were banned under the terms of EU state aid rules until the end of the last month – and that it had nearly paid back cash borrowed to keep it afloat during the banking crisis. The bailed out bank signalled it was ready to resume payments to bondholders – which were banned until the end of last month under EU state aid rules – and said it would next week pay back the last of the cash borrowed to keep it afloat during the banking crisis.
Even so RBS, reported a £1.4bn loss compared with £116m a year ago – although it was largely caused by a £2.5bn change in the value of the bank's debt. It also took an extra £125m charge for compensating customers missold payment protection insurance. But despite these "milestones", RBS remained loss-making, reporting a £1.4bn loss compared with £116m a year ago – although it was largely caused by a £2.5bn change in the value of the bank's debt. It also took an extra £125m charge for compensating customers who were mis-sold payment protection insurance.
The operating profits, which chief executive Stephen Hester prefers to focus on, were £1.2bn largely unchanged on the same three months last year. The taxpayer is sitting on a £22bn loss on its stake in the bank, bought at an average price of 50p, even after the 2% rise in the shares to 25p, which will prohibit any sell off by the government.
"Excellent progress continues in removing 'mistakes' of the past," said Hester. "As far as I'm aware there is no desire to sell at the current share price," said Stephen Hester, chief executive of RBS, despite speculation that a stake could be sold to Middle Eastern investors.
The taxpayer is sitting on a £22bn loss on its stake in the bank, bought at an average price of 50p, even though the shares rose 1% to 24.8p by 8.30am. The operating profits, which Hester prefers to focus on, were £1.2bn which he said showed that "excellent progress continues in removing 'mistakes' of the past".
"As far as I'm aware there is no desire to sell at the current share price," said Hester, despite speculation that there have been talks with potential Middle Eastern investors to buy a stake. Parachuted in to run RBS during its October 2008 bailout, Hester has previously said that investors regard buying bank shares as "dumb" and repeated that on Friday, saying "the share price is sending a very clear signal".
He has previously said that investors regard buying bank shares as "dumb" and repeated that on Friday saying "the share price is sending a very clear signal". Hester, who has waived a near £1m bonus following political pressure, also admitted it would be "at least a year" until any decision could be made on resuming dividend payments to shareholders. "One of the manifestations of the end state of RBS is that we should be a strong dividend payer and the issue is how we get there."
Hester also said it would be "at least a year" until any decision could be made on making dividend payments to shareholders. The bank is planning a one for 10 share consolidation – which would move the share price to 248p and is intended to reduce volatility in its price – which Hester described as "a matter of symbolisation in terms of presenting a new face to the capital markets". The bank is planning a one-for-10 share consolidation – which would move the share price to 248p and is intended to reduce volatility in its price – which Hester described as "a matter of symbolisation in terms of presenting a new face to the capital markets".
He described the move to resume payments to bond holders as "important recovery milestones" and pointed out that the bank would next week pay off the last of the funds it borrowed from the Bank of England – some £163bn – during the crisis. The government has made a £1bn profit from the loans. RBS is still borrowing from the European Central Bank. He described the move to resume payments to bondholders as an "important recovery milestone" and pointed out that the bank would next week pay off the last of the funds it borrowed from the Bank of England – some £163bn – during the crisis. The government has made a profit of at least £1bn on the loans. RBS is still borrowing from the European Central Bank.
The loan to deposit ratio – which shows how many savings can be used to supporting lending – has now reached 106% compared with more than 150% during the crisis. But the government is still insuring the bank's most troublesome assets through the Asset Protection Scheme although RBS may be able to exit the scheme when it will have paid a total of £2.5bn in fees. RBS, like other UK banks, is being subjected to "stress tests" by the FSA, which will influence its ability to leave the scheme, RBS said.
"With growth prospects muted in the major economies in which the group operates, and with fragilities persisting in European financial markets, the focus has remained on improving balance sheet strength and a strong liquidity position," Hester said. Ian Gordon, an analyst at Investec who forecasts a share price of 30p by Christmas, said: "It is hardly a sexy story, but give credit for the very strong evidence of balance sheet repair."
The bank has also paid £2.5bn for the cost of the insurance it receives for its most troubled assets through the asset protection scheme. As with its rivals, RBS continues to be hit by charges to compensate customers for PPI mis-selling and it has now set aside £1.2bn for claims. By the end of March it had paid out £501m and Hester concurred with António Horta-Osório, chief executive of Lloyds, who earlier this week hit out against bogus claims.
Ian Gordon, an analyst at Investec, said: "It is hardly a sexy story, but give credit for the very strong evidence of balance sheet repair."
As with its rivals, RBS continues to be hit by charges to compensate customers for PPI misselling and it has now set aside £1.2bn for claims. Some £501m had been paid out by 31 March and Hester concurred with António Horta-Osório, chief executive of Lloyds, who earlier this week had hit out against bogus claims.
In Ireland – where Hester said the bank had granted some "stupid" loans – the bank continues to face "exceedingly difficult market conditions" and incurred an operating loss of £310m as customers fell behind on debt repayments.In Ireland – where Hester said the bank had granted some "stupid" loans – the bank continues to face "exceedingly difficult market conditions" and incurred an operating loss of £310m as customers fell behind on debt repayments.
In the UK, Hester said that the official GDP data – which contracted 0.2% in the first quarter and took the UK back into recession – did not paint a true picture of the economy which he thought was a "bit better than those GDP numbers but it's still pretty flat". RBS's lending, measured by balances drawn down by customers, fell 1% and Hester said "at the moment customers are holding their fire". In the UK, Hester said that the official GDP data – which showed a contraction of 0.2% in the first quarter taking the UK back into recession – did not paint a true picture of the economy which he thought was a "bit better than those GDP numbers but it's still pretty flat". RBS's lending, measured by balances drawn down by customers, fell 1% and Hester said: "At the moment customers are holding their fire."