Business

RBS profits rise on Citizens sale

RBS hq Image copyright Reuters

Royal Bank of Scotland Group said third-quarter net profit rose to £952m from £896m after it booked a £1.1bn gain from its sale of US bank Citizens.

RBS, which was was bailed out by the UK government in 2008 and is currently 73% owned by the state, said restructuring costs soared to £847m.

Revenues slipped by £596m to £3.04bn as it shrank its corporate bank.

The bank warned that future litigation and past misconduct costs could be substantially higher than expected.

"Material further and incremental costs and provisions in respect of conduct and litigation related matters are expected, and could be substantially greater than the aggregate provisions RBS has recognised," the bank said in a statement, adding that the timing and size of penalties is "uncertain".

The lender set aside £129m for litigation, mainly for mortgage-backed bonds.

Restructuring charge

Excluding the one-off gain from Citizens, movements in the value of its own debt, and a large gain last year from a revaluation of the bank's loan book, RBS posted a quarterly loss of £213m from a £260m profit a year earlier.

Chief executive Ross McEwan is reshaping RBS into a smaller bank, pulling out of many businesses in Europe and Asia and slimming down its investment banking operations.

The restructuring charges include £190m spent during the three months to September on separating Williams & Glyn, the package of branches RBS was told to sell under EU rules governing state aid.

It emerged on Thursday that RBS is selling its remaining 20.9% stake in Citizens.

RBS bought the bank, which is focused on the east coast of the US, for $440m in 1988 and turned it into one of the country's biggest regional banks.

But now state-owned RBS is cutting operations abroad in order to focus more on its main UK retail business.

It first sold part of the US company in September last year in an initial public offering, then sold another chunk in March this year.

Citizens Financial Group said in a statement that completion of the share offer was "expected to result in RBS's complete exit from its ownership stake in CFG's common stock".

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