LONDON: Royal Bank of Scotland said it would take a surprise 2.5 billion pound ($3.58 billion) hit to its fourth-quarter profits after setting aside more cash to cover litigation costs, compensation for mis-selling loan insurance and an impairment charge at its private bank.
The mass problem-fixing is the latest stage of Chief Executive Ross McEwan's attempts to turn around the lender so the government can shed more of the 73 percent stake it still owns after bailing it out at the height of the financial crisis.
RBS said in a statement that it would also make a 4.2 billion pound payment into its pension scheme due to changes in its accounting policy, while it will set aside an extra 2.2 billion dollars for mortgage-related litigation in the United States.
The extra provision for the U.S. litigation would reduce fourth-quarter profits by 1.5 billion pounds, while a further provision for payment protection insurance mis-selling would cut off a further 500 million pounds and a goodwill impairment charge at its private bank would take off a further 498 million pounds, it said.
"I am determined to put the issues of the past behind us and make sure RBS is a stronger, safer bank. We will now continue to move further and faster in 2016 to clean-up the bank and improve our core businesses," said McEwen, who joined in October 2013.
"We've always been open about the scale of past issues facing RBS and although there is clearly much more to do, this announcement is a further step towards addressing legacy issues and building a great bank for our customers and delivering long term value for our shareholders."
The bank said the combined effect of this, plus other provisions and charges, would reduce its common equity Tier 1 capital ratio by 1.6 percent.
Comments
Comments are closed.