Saturday 29 October 2016

Williams & Glyn sale costs RBS £1.5 billion bill


Royal Bank of Scotland 73% government owned, said it will miss a European Union deadline to offload the 300-strong branch network, saying no deal will happen before the end of 2017.

RBS ditched plans to float W&G and saw Santander walk away from sales talks. Clydesdale has made a tentative approach, but it is not clear it wants the whole network.

RBS’s restructuring bill for the year will jump to £1.5 billion, well ahead of its previous guidance of £1 billion.

W&G "restructuring" costs were £301 million in the last quarter, a write-down that contributed to a £469 million loss.

That takes RBS losses for the year to £2.5 billion. It has not made a full-year profit since 2007, before the banking crisis broke and RBS needed a £45 billion bail-out.

The loss in the third quarter compares with a profit of £952 million a year ago and is far worse than analysts expected.

Despite that, the shares initially bounced today on relief that the "core" bank, is doing fairly well. Later, they were down 3p at 193p.

Were it not for W&G, litigation and conduct costs, RBS said it would have turned a profit of £255 million.

George Salmon at Hargreaves Lansdown said: "An improved performance from the bank’s core divisions has provided some cheer. However, the bad bank remains a horror story for RBS.

"Shaking hands on more commercial loans and mortgages is certainly good news, but the much-maligned bad bank keeps attracting problems. The £190 million writedown from the shipping portfolio is the latest in a line of impairments in recent years."

Chief executive Ross McEwan also admitted the bank is not going to hit 2019 targets on costs and profits, which it blamed on low interest rates. It will elaborate when it reports full-year results.

RBS is facing a massive fine from the US Department of Justice for mortgage bond mis-selling. The fine is potentially so large that RBS admits it does not know when it could start paying dividends to shareholders, including the taxpayer.

"The timing of returning excess capital to shareholders through dividends or buybacks remains uncertain," RBS said.

The bank is also awaiting the publication of a Financial Conduct Authority report into allegations from small business owners that its GRG arm drove them into bankruptcy on purpose.

James Hayward, of RGL Management, which plans to sue the bank, accused RBS of "not making adequate provision to meet pending legal challenges". RBS said it will defend the action.



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