RBS sinks deeper, weighed down by past costs

LONDON • Royal Bank of Scotland Group has cautioned that Britain's referendum on European Union membership and obstacles to resuming a dividend are clouding its outlook after posting a deeper loss tied to costs from its past.

The first-quarter net loss more than doubled to £968 million (S$1.9 billion) from £459 million a year earlier, the Edinburgh-based lender said in a statement yesterday.

Income dropped 13 per cent to £3.06 billion. The shares were down 2.9 per cent at 237 pence in London morning trading.

Results were also hit by a £1.2 billion payment to end the British government's prior claim on any dividends, a £238 million restructuring bill and a £226 million impairment charge in its shipping loan portfolio.

"We continue to deal with a range of uncertainties in the external environment, not least those caused by the forthcoming referendum on the UK's continuing membership of the European Union," the bank said.

RBS cast further doubt over its plans to resume dividends by saying on Thursday that there is a "significant risk" it would miss a European Union deadline to separate its Williams & Glyn (W&G) unit by the end of next year.

Disposing of the consumer division is among a series of roadblocks to the first payout after RBS required a £45.5 billion UK government bailout in the financial crisis. It is also awaiting a settlement with the United States authorities over the sale of mortgage-backed securities.

Analysts are sceptical of the bank's ability to deliver on its promise to divest the business by the 2017 deadline.

"With the excess capital now being tied to... the W&G surgery where we have no option but to trust management's view on complications, we have decided to get out," analysts at Bernstein said in a note to clients.

RBS also disclosed that the Swiss government had opened an investigation into transactions at its former international private bank, which earlier this month was accused by a Malaysian parliamentary investigation of handling US$700 million (S$940 million) in a multi-billion-dollar graft scandal.

REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on April 30, 2016, with the headline 'RBS sinks deeper, weighed down by past costs'. Print Edition | Subscribe