Taxpayer-owned Royal Bank of Scotland has taken a £400 million hit for its role in forex market rigging allegations and warned there may well be more to come from this and other past banking scandals.
But a strong improvement in Irish property prices, lower bad debts and lower costs saw the bank swing from third-quarter losses of £634 million in 2013 to profits of £1.27 billion this year.
So-called conduct issues such as the forex scandal cost £780 million including a further £100 million for PPI mis-selling. RBS shares, which are 80 per cent owned by the taxpayer after its £45 billion bail-out, rose 14.7p to 380p — their highest level for 12 months.
“We are actively managing a slug of significant legacy issues,” said chief executive Ross McEwan. “For some of them the cheques are already in the post but there are plenty more bumps in the road ahead.”
RBS, with five other banks, is near reaching a deal with the Financial Conduct Authority and some US regulators over the forex scandal but will still have to deal with others at a later date.
It also has outstanding cases against it over US mortgage-backed securities and the IT collapse two years ago. McEwan said: “We cannot make any firm provisions on legacy issues until we have some fairly clear numbers and discussions going on with the regulators.”
Video: The latest business news
He also said RBS would not pay a dividend until its key core tier 1 capital ratio is up from today’s 10.8 per cent to above his 2016 target of 12 per cent.
He said: “There’s no way we will pay a dividend until we are well above that 12 per cent target.”
Analysts feel there is little chance the Government will sell its first tranche of RBS shares before next year’s election.Reuse content