Bank making 'good progress' says CEO
Legacy issues see RBS slump to £2 billion loss
Royal Bank of Scotland today unveiled a £2 billion loss for the first six months of the year.
Chief executive Ross McEwan blamed legacy issues which have “plagued this bank” and led to its £45bn government bailout during the financial crisis.
The bank said the loss was mainly a result of £1.3bn of conduct and litigation charges and £630m of restructuring costs. Shares in RBS were the worst performers on the FTSE 100, down 6.5% at lunchtime.
Insisting the bank was recovering and producing good cash flow, Mr McEwan said: “We’re at the mid-way point in our five year plan and we’re making good progress.
“We are clearly in phase two of our strategy where our focus is on drawing a line under many of the legacy issues that have plagued this bank, and transforming the core business so we can deliver consistent, sustainable profits and results for our shareholders and do great things for our customers.
“This progress is important because it means we are well positioned to support our customers through the challenges that an economic slowdown poses for the country. We have been the fastest growing large UK bank – with net lending into the UK economy higher than any other bank in the first half of the year. We are open for business, ready to lend, and ready to play our part in this new chapter for the country.”
There was an operating loss before tax of £274 million (H1 2015: £261m profit) and an attributable loss of £2.045bn (H1 2015: £179m loss).
The bank’s core business reported a £1bn adjusted operating profit in the second quarter, rising to £2bn in the half-year.
The bank announced that it will no longer pursue a separation of Williams & Glyn which was expected to be created from 315 NatWest branches.
Mr McEwan said in a media call that it was now clear that the Williams & Glyn business would not achieve the returns above the costs of capital over five years.
He confirmed that a trade sale was now being pursued and that talks with “interested parties” are ongoing. Santander is understood to be in advanced discussions.
In its half-year statement, the bank said: “Due to the complexities of Williams & Glyn’s separation, whilst good progress has been made on the programme to create a cloned banking platform, the board concluded that the risks and costs inherent in the programme are such that it would not be prudent to continue with this programme. RBS will instead prioritise exploring alternative means to achieve divestment.”