RBS Profits Slump After PPI Bill
The Royal Bank of Scotland has published new figures that show the bank took a significant dip and made a loss over the third quarter after what has been viewed as a punishing response to PPI repayments.
The Scottish bank, in which the UK government owns a majority 62% stake, made a pre-tax loss of around £8m over the last three months, which it blamed predominantly on a £900m requirement to repay mis-sold PPI to mortgage owners with the bank.
The sudden loss came just as leadership of the bank is about to change hands, handing the reigns over to Alison Rose in November, the first woman to lead one of the big banks in the UK.
What Caused Slowdown?
This shock downturn in RBS’s profits comes just a year after they reported profits of over £900m in the same quarter just one year previously, leading many to wonder just what prompted the sudden downturn in the bank’s earnings.
The major hit for the company came from its investment arm, known as NatWest Markets, who reported an astonishing £193m loss from the previous quarter due to what they believed were changes in thought about the global economy.
In response to the figures, representatives from the bank suggested that these figures were less concerning than they might appear and that their key retail and commercial wings were still performing well, despite the hit.
Financial Conduct Authority
PPI has played a huge role in this announcement and comes after the FCA (Financial Conduct Authority) warned that claims for compensation had vastly increased leading up to the deadline in August.
All of the major banks have been hit with claims from homeowners, but RBS’s £900m bill seems to be one of the highest in the industry.
The bank has been consistently trying to make a profit since the crash of 2008 and many are hopeful that the company bringing in new management will mean a new chapter for the bank.
However, with Brexit concerns and uncertainty already at the forefront of the company’s mind, these new figures do not spell a positive start for one of the UK’s biggest banks.