Royal Bank of Scotland Group loss widens
LONDON (MarketWatch) --
The mainly government-owned bank said revenue in the period fell to £11.26 billion from £15.3 billion a year earlier.
A year earlier, the group recorded a net loss of £1.43 billion. The recent half's results were hit by a £2.97 billion charge for the fair value of the company's debt. The accounting charge reflects the higher value of the bank's debt in the market, which theoretically would make it more expensive to repurchase.
Revenue for the second quarter came in at £6.09 billion from £8.24 billion in the same quarter a year before.
"Despite the tougher economy, these results show our ongoing businesses to be more resilient than before with many further improvements underway," Chief Executive Stephen Hester said. The lender said that it expects impairment charges from its Northern Irish unit to remain "elevated" and lowered targets for the reduction of the bank's non-core business.
It also put aside £125 million to compensate customers after the bank's computer systems failed in June, a debacle that left millions of clients without access to their accounts. The bank also put aside an extra £135 million to cover the misselling of payment-protection insurance.
Like several banks, the lender is also embroiled in a global investigation into allegations that banks rigged interbank lending markets. RBS said it isn't possible to reliably measure what effect these investigations and any regulatory findings may have on the bank, including the timing and amount of fines or settlements. The bank has already fired a number of employees following investigations.
Since its government bailout amid the financial crisis three years ago, Hester has led RBS through an intensive restructuring plan, drastically reducing its balance sheet and selling off or winding down many businesses designated as "non-core." The goal is to make the bank smaller, safer and get the government a return on its investment.
By the end of the year, the bank could exit the government's Asset Protection Scheme, under which RBS pays the state a fee to insure it against losses on certain assets. If regulators deem it safe for RBS to exit this insurance scheme, it would boost the bank's image, analysts say.
On Friday, RBS said: "We will make an announcement regarding exit from the Asset Protection Scheme once formal regulatory clearance has been secured."
In 2008, the government invested £45.5 billion into the bank at an average buy-in price of around 50 pence a share. On Friday, following a reverse stock split, RBS shares were at roughly half that amount.
, 
, 
, Copyright ©2013. All rights reserved.