RBS back into the red following legal costs - but still beats expectations

Chief executive Ross McEwan welcomed government's decision to sell its stake

The UK government owns and manages an 81 per cent stake of the RBS Group through UK Financial Investments – a company set up in 2008 to manage the Treasury’s shareholdings in UK banks. The government’s voting rights are limited to 75 per cent so the bank (Getty)

Royal Bank of Scotland will not restart dividend payments until 2017 at the earliest but that should not stop the Government from kicking off the first sale of shares in the taxpayer-owned bank this year, its chief executive said today.

Ross McEwan also warned that the bank, which is 78% owned by the taxper following its £45 billion bail out, would continue to have “a very noisy year as we go further on restructuring and dealing with past conduct issues.”

Those were key factors in the bank’s first half post-tax loss of £153 million which came after £1.5 billion of restructuring costs and £1.3 billion of legal and compensation bills. But the second quarter attributable profit of £293 million against a loss of £446 million in the first half - driven by a strong rise in mortgage lending - was better than the City had expected and the shares rose 5.8p to 359p.

That is still below the average 502p paid by the taxpayer in the bailout but Chancellor George Osborne has siad the Government should start selling down its stake even if it starts at a loss.

McEwan said: “I don’t like seeing losses and I’ll not rest until we can see real profits flowing through to the bottom line. I welcome the Government’s decision to start selling down its stake which will be a significant day for the bank.”