RBS writes off another £780m over scandals

Royal Bank of Scotland is to set aside �400 million to settle foreign exchange rate rigging allegations.
Royal Bank of Scotland is to set aside �400 million to settle foreign exchange rate rigging allegations.
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​Royal Bank of Scotland ​has written off another £780​m for past misconduct ​​and warned that further charges will hit its profits as the banking scandal rumbles on.

​RBS set aside £400m to settle claims of foreign exchange (forex) rate rigging – the latest institution to do so amid global investigations into the scandal.

The bank, which is 80 per cent owned by the taxpayer following a ​£​45​bn bailout during the financial crisis, also added £100m to its compensation bill for the mis-selling of payment protection insurance (PPI), taking the total so far to £3.3bn.

Further sums included £100m in regulatory provisions which include a coming settlement with the Financial Conduct Authority (FCA) over a 2012 IT failure. There were also litigation costs as RBS faces a series of lawsuits in the US.

​Despite reporting a third ​consecutive profits haul, RBS ​​said further work ​i​s needed before it c​an pay back the taxpayer or restart dividends.

Chief executive Ross McEwan, who steered the bank back into profit this year after it made a loss of £8.2bn in 2013, said:​ ​“We are actively managing down a slate of significant legacy issues.

​“​This includes significant conduct and litigation issues that will continue to hit our profits in the quarters ahead​.”

​​Mr McEwan said RBS won’t pay a dividend until it has more clarity over future misconduct charges.

“I don’t think we should be thinking about dividends until we’ve got a really good capital build and seen some of the bumps in the road out of the way,” he said.

RBS said it made a third-quarter pre-tax profit of £1.3bn, compared with a loss of £634m the year before. This was ahead of an average analyst forecast of £1.1bn.

The economic recovery in Britain and Ireland has enabled RBS to recover debts that were previously written off.

The bank had a net release of previously written-off loans of £801m during the quarter, ahead of an average forecast of £590m.

RBS has decided to keep Ulster Bank, having carried out a review of the business which could have resulted in it being sold off.

Mr McEwan said the unit could deliver attractive shareholder returns in future.

“We know we still have a long list of conduct and litigation issues to deal with and much, much more to do to restore our customers’ trust in us​,” he said.​

Gross new mortgage lending totalled £5.3​bn while gross lending to small and medium enterprises was £2.6​bn, up 24​ per cent​ from the same period ​last year.

RBS said its corporate and institutional banking division “had a weak quarter” as it was hit by the conduct charges as well as lower income​,​ but personal and business banking increased operating profit by ​three per cent​ to £499​m.

​“We are delighted with the third quarter of profits, demonstrating that our strategy is starting to deliver good results​,” said ​Mr McEwan​. ​

He added ​that ​the UK economy ​i​s in “pretty good shape” though growth ​i​s expected to drop next year and the housing market ​i​s easing.

Mr McEwan made clear that the timing of any sale of the taxpayers’ stake in the bank​ ​is a matter for the Government.

He declined to give any figures about branch closure plans – days after Lloyds said it was shutting 200.

But he said: “We have made no bones about the inevitability of branch closures as more and more customers use digital to do day-to-day banking.”

​The bank has over 5,500 staff and pensioners in Yorkshire and over 1.1 million personal customers and 72,000 business customers.