30th Apr 2015 06:29
LONDON (Alliance News) - Royal Bank of Scotland Group PLC Thursday said it swung to a first-quarter net loss as revenue fell and operating expenses increased due to the costs of restructuring, litigation and conduct.
The UK government retains a stake of about 80% in RBS, which required a GBP45 billion bailout in the financial crisis of 2007-09.
In a statement, the bank said it made a GBP446 million net loss in the three months ended March 31, compared with a net profit of GBP1.20 billion in the corresponding quarter of the prior year.
Pretax profit fell to GBP53 million from GBP1.49 billion, as revenue fell to GBP4.33 billion from GBP5.05 billion and operating expenses increased to GBP4.10 billion from GBP3.41 billion.
Within the operating expenses, the costs of restructuring increased to GBP453 million from GBP129 million, while litigation and conduct costs of GBP856 million were recorded against none in the corresponding quarter of the prior year.
RBS said it is in talks with authorities over failings in its foreign exchange business within its corporate and institutional bank. It said the litigation and conduct costs related to litigation and investigations in the US also include a provision for mortgage-backed securities, as well as customer redress costs.
"These include advanced settlement discussions regarding the criminal investigation being conducted by the DOJ and with certain other financial regulatory authorities, and RBS expects that it will incur financial penalties in conjunction with any such settlements. The timing and final amounts of any settlements and related litigation risks and consequences remain uncertain and could be material," RBS said in a statement.
The new provision comes after an agreement in November 2014 under which RBS paid USD290 million to the US Commodity Futures Trading Commission and GBP217 million to the UK Financial Conduct Authority over the foreign-exchange scandal.
By Samuel Agini; [email protected]; @samuelagini
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