RBS Loses £2bn for Payment Protection Insurance

August 19, 2016
by admin in PPI News

The Royal Bank of Scotland reports up to £2bn in losses for the first half of the year. About £1.3 billion of the fund goes to PPI and other legal costs.

PPI refunds receive about £450 of the allocated amount. The amount is to cover its possible administrative costs for processing PPI once the FCA approves the move of the deadline to June 2019.

RBS’ losses had significantly increased from  £179 billion the previous year. According to analysts, it shows the crucial impact of its £1.2bn repayment to the Treasury as part of its journey returning to the private sector.

RBS CEO Ross McEwan said the bank is now in a proper position to support consumers.

“We are clearly in phase two of our strategy, where our focus is on drawing a line under many of the legacy issues that have plagued this bank, and transforming the core business so we can deliver consistent, sustainable profits and results for our shareholders and do great things for our customers,” he said.

“This progress is important because it means we are well positioned to support our customers through the challenges that an economic slowdown poses for the country,” Mr McEwan added.

But he also warned the UK’s Brexit could have detrimental effects on their company profits.

“The outcome of the UK’s EU referendum has created considerable uncertainty in our core market and we continue to assess all its implications.

“In the current low rate and low growth environment, achieving our longer term cost:income ratio and return targets by 2019 is likely to be more challenging.”

The chief executive also appeared to address Bank of England governor Mark Carney’s warning that banks have “no excuse” to stop lending following the decision to cut interest rates and launch a package of measures to support bank lending.

“We have been the fastest-growing large UK bank – with net lending into the UK economy higher than any other bank in the first half of the year. We are open for business, ready to lend, and ready to play our part in this new chapter for the country,” Mr McEwan said.