UK taxpayer-owned RBS reports first profit in a decade
By GREGORY KATZ
Feb. 23, 2018
LONDON (AP) — Taxpayer-owned Royal Bank of Scotland reported Friday its first profit in a decade but warned that its 2018 results may be hit by a pending settlement with U.S. officials.
RBS, which was bailed out by the British government during the 2008 financial crisis, posted a 752 million pound ($1.1 billion) profit for 2017, a major turnaround from the nearly 7 billion pound loss reported the year before.
The bank is still 72 percent owned by British taxpayers after the government intervention to keep it afloat.
Despite the improvement, hopes that the bank has put its problems behind it are tainted by the expectation that its results this year will be substantially affected by a multibillion-dollar settlement with the U.S. Department of Justice over mortgage-backed securities that were mis-sold before the financial crisis.
"Our results in 2018 are somewhat dependent upon the settlement with the DOJ, which we hope will happen," RBS Chief Executive Ross McEwan said.
The size of the settlement has not been determined yet and the bank says the timing of the settlement is out of its control.
"When it does come, you know, it will have a major impact on our numbers depending on its size," McEwan said. "But if you have a look at the underlying profitability of this bank, it is very good."
The bank in July reached a $5.5 billion settlement in the United States with the Federal Housing Finance Agency over the mis-selling of residential mortgage-backed securities, but the outstanding issues with the Department of Justice are still pending.
The bank says it is continuing its cost-cutting and restructuring plan as it increasingly moves to digital banking.
McEwan declined to offer details on what the digital move would mean to the number of physical bank branches and the number of jobs.