RBS reported a half-year profit for the first time in three years, its latest results showed on Friday, as the bank revealed plans to use Amsterdam as its EU hub after Brexit.
The bailed-out lender made £939m in the first half of 2017, up from a £2bn loss a year ago. Despite the results, chief executive Ross McEwan warned that a full-year loss was likely. The bank has not made a full-year profit since it was rescued by the government in 2008.
RBS said it was in discussions with Dutch regulators after its investment banking business, NatWest Markets, “reviewed ways to minimise disruption to the business and continue to serve its customers well in the event of any loss of EU passporting.”
It said it was taking measures to ensure that its existing operation in the Netherlands is “operationally ready” to become its trading base within the EU, “should the outcome of the current EU separation negotiations make it necessary”.
Up to 150 staff could be employed in the beefed-up Dutch office, RBS said.
It also revealed it is being investigated by the Financial Conduct Authority over money-laundering compliance concerns, without giving further details.
RBS took a £342m hit for conduct and litigation costs in the second quarter as well as £213m in restructuring charges, demonstrating that the legacy issues which have plagued the bank since the financial crisis are still not fully resolved.
Nicholas Hyett, equity analyst at Hargreaves Lansdown said: “The problem that is overhanging RBS’s recent successes is the legacy of past misdeeds.
“The most significant of these relates to mis-selling [of US mortgage-backed securities], for which the bank has $3.75bn (£2.88bn) of outstanding provisions.
“However, with the US Department of Justice (DoJ) investigation rumbling on, we still don’t have clarity on whether that will be sufficient to cover all the costs.
Last month, RBS agreed a £4.2bn settlement in the US over alleged mis-selling of subprime mortgage bonds before the financial crisis.
However, it is is also currently negotiating a separate settlement over the same issue with the DoJ. A decision is expected later in the year, with some analysts warning it could result in another multibillion pound bill.
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