RBS loses £469m due to misconduct charges – and is set to face billions more in legal costs

Scandal-hit bank also admits it will now definitely breach deadline imposed by European Commission for the sale of 314 branches

A report into mistreatment of small business customers at the RBS restructuring unit was divulged to the BBC (AFP/Getty)

Royal Bank of Scotland lost £469m between July and September due to misconduct charges and legal costs, as well as a large bill to restructure its business.

The loss is more than double the £231m predicted by analysts and compares unfavourably with the £940m profit RBS made in the same period last year, though that figure was helped by the sale of its US Bank, Citizens.

It means the 73 per cent government-owned bank has now lost £2.5bn in the first nine months of 2016. It has never returned a full-year profit since a £45.5bn taxpayer-funded bailout in 2008.

The latest losses were primarily a result of the £469m cost of restructuring its business, as well as a £425m legal bill and a £300m hit due to changes in tax rules.

The scandal-hit bank also admitted it will now definitely breach a deadline imposed by the European Commission for the sale of 314 branches that form its Williams & Glyn unit. RBS may face further fines for the breach but said it did not know what sanctions the Commission might impose.

It has to fully separate the business by the end of 2017 under the terms of the 2008 bailout, but said this is now impossible.

The inability to sell W&G is one of the main obstacles in the way of government attempts to sell more of its stake in the bank.

Chief executive Ross McEwan said: 'We've said that 2015 and 2016 would be noisy as we work through legacy issues and transform this bank for customers.

“These results reflect that noise. Our core business results were good, with a £1.3bn adjusted operating profit – our best quarter since 2014.

“The core business has now delivered on average over £1bn in adjusted operating profit for the last seven quarters.”

RBS said it faces a “number of challenges” in the months ahead. It could be forced to pay out billions for numerous legal actions making their way through the courts.

Thousands of shareholders are suing the bank for £4bn, claiming RBS executives lied to them about the bank’s finances, leading them to invest in the company just before the financial crisis wiped billions off its value.

US regulators could also fine RBS up to $13bn for mis-selling subprime mortgages before the crisis.

Earlier this month, leaked documents showed that RBS crushed thousands of businesses during the financial crisis to increase its own profits.

Internal emails showed the bank implemented a plan to squeeze customers facing financial difficulty and gave bonuses to staff for identifying struggling firms.

RBS then bought assets at rock-bottom prices once companies hit difficulties, often selling them at a profit. It also hit them with large fees, driving many into the ground and boosting its own bottom line.

A group of businesses who say they have been unfairly treated by GRG is suing RBS in 2017.

James Hayward, who is representing the group said: “RBS continues to mislead the market by not making adequate provisions to meet pending legal challenges. RBS is well aware of the businesses they destroyed through the actions of GRG and they are also aware that RGL will shortly be bringing a multi-billion pound claim to finally bring redress and compensation for the members of this action.“