Financial Results

RBS Reports Operating Loss At Private Banking Arm; Sale Of International PB Arm "On Track"

Tom Burroughes Group Editor London 30 July 2015

RBS Reports Operating Loss At Private Banking Arm; Sale Of International PB Arm

The UK-listed banking group, which has sold its international wealth business, said completion of that transaction was on course for the end of this year.

The private banking arm of RBS reported an operating loss of £50 million in the six months to the end of June, against a profit of £145 million ($226.2 million) a year earlier, RBS said today.

During the first half of the year, RBS, still majority-owned by the UK government, sold its international wealth management arm outside the UK, bearing the Coutts International brand, to Geneva-headquartered Union Bancaire Privée. RBS said the sale of this business “remains on track for 4Q 2014”.

In H1, 2015, total income at the private banking segment was £421 million, against £545 million a year earlier.

The segment had a total of £111 million in restructuring and litigation costs in the first half of the year, and £169 million of staff and other costs, it said in a statement. The cost/income ratio, on an adjusted basis, was 86 per cent, widening from 73 per cent a year earlier. It had a total of 2,700 full-time equivalent employees.

Total assets under management stood at £27.1 billion at the end of June this year, from £29.2 billlion at the end of March; customer deposits were £29.8 billion, from £29.6 billion, it said.

On the AuM figures, RBS said portfolio values were hit by the Greek crisis and the associated effect on European equity markets.

Across the firm as a whole, RBS said that a “strong operating performance" from personal and business banking (PBB) and commercial and private banking (CPB) contributed to an attributable profit of £293 million for Q2 2015, although there was a loss of £153 million for H1 2015.

Shares in RBS were up 1.12 per cent around late-morning trade today, at 357.1 per share; it outperformed the FTSE 350 Index of UK shares, which was up 0.61 per cent.

This loss for H1 included £1.503 billion of restructuring costs and £1.315 billion of litigation and conduct costs. The attributable loss for H1 2015 was down from a profit in H1 2014 as income attrition in the "exit bank" businesses (parts of the business that no longer fit the bank's plans) preceded the delivery of cost reductions and higher restructuring, litigation, and conduct costs were incurred, the bank said.

Second-quarter operating profit at RBS was £304 million, in line with results for Q1 2015. Litigation and conduct costs were lower at £459 million compared with £856 million in Q1 2015, while restructuring costs rose to £1.05 billion from £453 million in Q1 2015 as the pace of restructuring accelerated.


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