LONDON – The Royal Bank of Scotland put aside some 2 billion pounds ($2.8 billion) as the taxpayer-owned institution continues to tally the costs of misconduct and legal claims.
In an unscheduled update released Wednesday, the bank also said it would inject 4.2 billion pounds into its pension funds because of accounting changes. CEO Ross McEwan said the bank was determined to put past issues behind it.
“We will now continue to move further and faster in 2016 to clean-up the bank and improve our core businesses,” he said. “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.”
The cash was set aside for legal claims in the United States regarding toxic mortgage-backed bonds but doesn’t include provision for separate conduct matters by the U.S Department of Justice and various U.S. State Attorneys General, though the bank acknowledged such costs “could individually or in aggregate prove to be substantial.”
More money was also set aside for compensation in the scandal surrounding consumers who were improperly sold payment protection insurance. The bank also wrote down nearly half a billion pounds in respect to private banking.
The bank was bailed out at the height of the 2008 financial crisis and has been dogged by its past excesses, including an ill-fated global expansion drive that briefly made it the world’s largest bank. It remains 73-per cent-owned by the British taxpayer.
It is now a much different bank, despite the lingering clouds. Shore Capital Markets’ banking analyst Gary Greenwood said the bank could readily deal with the hit.
“While such headlines are disappointing they are not necessarily unexpected and we note that RBS now has the balance sheet strength to comfortably absorb such costs,” he wrote.