All quiet at RBS – but soon the noise will be cranked up

Outlook

Talking of privatisations, Royal Bank of Scotland did the Chancellor’s plans for an early one no harm with its results. Did you notice? You might not have. This was one of those rare occasions when RBS managed to get through its presentation without attracting all that much attention to itself.

In some places it wasn’t even the biggest banking story of the day. That honour belonged to rival Santander, which revealed that the UK is its most profitable market as it gobbles up great chunks of current account business.

This rare spell of relative calm won’t last. The RBS chief executive Ross McEwan has warned of a “noisy year” to come as the bank once again gets battered by the ghost of Fred Goodwin, with yet more conduct issues likely to be hammering on his door, together with some Centrica-style restructuring and job losses.

Not that the City seems to care. As ever, whether RBS made a profit or a loss depends on which set of figures you care to look at. The one that got analysts excited was the second-quarter “attributable profit”, which came in much better than expected, helped by the fact that some money set aside for bad loans came back to the bank as they turned out better than it had feared.

As a result, the (limited) noise made by RBS will have been sweet music to the Treasury’s ears. It would dearly like to get a sell-off going, even if that means taking an unnecessary loss on behalf of a taxpayer who would be better off if the Government gave Mr McEwan’s turnaround plan a bit more time to bear fruit.

The problem both face is that the experience with reserves set aside for regulatory and conduct issues has been the reverse of what has been happening to those set aside for bad loans.