Economy
Royal Bank of Scotland faces losses of £8bn
The Royal Bank of Scotland (RBS) is facing full year losses of around £8 billion, as it announces it has set aside £3.1 billion for claims relating to the economic crash.
The 80% state-owned bank is accused of mis-selling mortgage products, payment protection insurance (PPI) and fixing interest rates.
According to the announcement, £1.9 billion is being channelled towards litigation costs, relating to mortgage products, with a further £650m for the bank’s PPI bill and £500m for costs expected to be incurred after it was involved in rigging interest rates.
After the news broke, shares in RBS fell by around 3%.
The bank’s chief executive Ross McEwan said that the losses hold their origins in “pre-crash times”, insisting that they come as a result of “bad decisions” made before 2008.
Further losses are expected however, when the bank decides to write off £4.5 billion in bad debts and investments, with even further expected to be generated from the sale of bad assets.
The bank was criticised by business secretary Vince Cable, who said, “It’s an absolutely shocking story that the British taxpayers are still paying for the excesses of this bank in the boom period before it collapsed.”
Back in October, Lloyds announced that it had set aside a further £750m for costs relating to the PPI scandal, bringing their total contributions towards picking up the pieces to around £8bn. Last August, a study by consumer group Which? found that the total cost of the scandal has set the banks back by double the amount it cost to stage the London 2012 Olympics.
Further reading:
32m have suffered nuisance calls about PPI, says Citizens’ Advice
PPI bill double the cost of London Olympics, says consumer group
Lloyds faces criticism over bonuses and PPI mis-selling after revealing a £570m annual loss