Profit Dips Slightly At RBS's Wealth Arm; Group Creates "Bad Bank" Unit

Tom Burroughes, Group Editor, London, 1 November 2013


The wealth arm of UK-listed Royal Bank of Scotland, which
includes Coutts, its flagship private banking arm, reported a third-quarter pre-impairment
profit of £61 million, down from £71 million ($113.7 million) a year before, it
said today.

Operating profit was £60 million in the wealth division,
down from £63 million a year ago, RBS said in a statement on its results. At
the end of September, it employed a total of 5,000 staff, down from 5,100 at
the end of June and had a cost/income ratio of 77 per cent, versus 76 per cent
in the third quarter of 2012.

Assets under management, excluding deposits, were £30.5
billion, a 2 per cent drop from the end of June, RBS said.

Meanwhile, RBS, which is 81 per cent owned by the UK
taxpayer, is to create an internal "bad bank" to oversee the run-down
of its riskiest assets after the UK decided not to go ahead with a full break-up
of the bank. RBS was part-nationalised after it was hit with massive losses in
the credit crunch and after an ill-fated acquisition of part of ABN AMRO, the
Dutch bank.

RBS said it will put £38 billion of loans into a new “capital
resolution division” next year.

The UK bank logged a group 2013 pre-tax loss in the third
quarter of £634 million, after an £496 million accounting charge for improved
own credit, it said. The firm made a Q3 2013 core operating profit of £1.283 billion,
6 per cent higher than the prior quarter.

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