Royal Bank of Scotland slumps into second-quarter loss

London (AFP) – Britain’s state-rescued Royal Bank of Scotland tumbled into the red in the second quarter, after taking a large hit on litigation and conduct costs, it said Friday.

RBS made a net loss of £1.077 billion ($1.426 billion, 1.280 billion euros) in the three months to June 30, it said in a results statement. That contrasted with a profit after taxation of £280 million a year earlier.

The lender, which is 73-percent owned by the British government after a vast bailout during the global financial crisis, also cautioned over economic uncertainty after Britain’s EU exit vote. 

It took a huge £1.284-billion hit for legal costs in the reporting period, after setting aside more cash to cover a lawsuit brought by shareholders over its bailout and 2008 rights issue.

The charge also included more money for compensation for the mid-selling of credit insurance, or payment protection insurance (PPI).

Edinburgh-based RBS took a £392-million restructuring charge, taking the total so far this year to £630 million.

Chief executive Ross McEwan said however that the group was “well positioned” for a possible economic slowdown.

“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,” noted McEwan.

He added: “We are well positioned to support our customers through the challenges that an economic slowdown poses for the country.”

RBS meanwhile scrapped plans to float more than 300 branches under its dormant Williams & Glyn’s bank brand, and blamed the risks and costs of creating a new banking platform.

Instead the group added it would “prioritise exploring alternative means to achieve divestment” and stressed that it “remains committed to meeting its state aid obligations”.

The European Commission has demanded that RBS offload some of its branch network in return for the vast state support that it has received.