RBS loss £2bn amid legacy, litigation ‘plague’

Royal Bank of Scotland reported an attributable loss of £2.04 billion for the first half of 2016 — compared to a £179 million loss for the same period last year — as litigation and legacy costs continue to plague the company.

RBS shares fell about 6%. The firm’s stock has fallen almost 50% in the past year.

The legacy issues faced by RBS include litigation connected to a £12 billion rights issue in 2008 and problems related to the mis-selling of payment protection insurance (PPI).

The bank is still 73% owned by the UK taxpayer following its £45.5 billion bail out by the state during the 2008 financial crisis.

RBS has a current stock market value of around £22 billion, according to Bloomberg data.

Across its personal and business banking, commercial and private banking and corporate and institutional banking franchises, RBS actually reported an adjusted operating profit of £2.07 billion in the first half.

Meanwhile, RBS said it has had talks with a number of potential buyers for the bulk of its Williams & Glyn branch network. Santander and Clydesdale and Yorkshire Bank (CYBG) are understood to be among them.

RBS chief executive Ross McEwan said: “We’re at the mid-way point in our five year plan and we’re making good progress.

“We are clearly in phase two of our strategy where our focus is on drawing a line under many of the legacy issues that have plagued this bank, and transforming the core business so we can deliver consistent, sustainable profits and results for our shareholders and do great things for our customers.

“We have changed as a bank over the last couple of years which means we are much stronger, more resilient and better positioned to deal with any uncertainty and economic slowdown that we may face.”

RBS also said that its Royal Bank of Scotland, NatWest and Ulster Bank NI units will reduce their standard variable rate for mortgages by 0.25% in line with the Bank of England base rate reduction, bringing the rate for customers down from 4% to 3.75%.

“We’re passing on the base rate cut in full to our valued mortgage customers on our standard variable rate,” said McEwan.

“We have been the fastest growing large UK bank with net lending growth of over £20 billion in the first half of the year – higher than any other bank.

“We’re open for business and ready to lend responsibly to homebuyers up and down the country.”

RBS said it saw strong growth in gross new mortgage lending at £14.7 billion in the first half of the year, 62% more than the same period last year.