Royal Bank of Scotland Group Plc (RBS) reported a massive loss in the first quarter of 2015, even more so than pessimistic analysts estimated. The UK’s biggest bailed-out bank bank losses emanated from its penalties for a global forex manipulation scandal and RBS was forced to set aside additional capital for further forex probes.
RBS reported on Thursday a £446 million ($687 million) loss in the first quarter of 2015, compared with a £1.2bn profit at the same point last year. The RBS report caused an uproar in the British press as the bank is still 81% owned by the UK taxpayer after receiving a £46 bailout in 2008.
RBS also set aside another £856 million ($1.3 billion) to cover the cost of future misconduct charges. “These include advanced settlement discussions regarding the criminal investigation being conducted by the US department of justice and with certain other financial regulatory authorities and RBS expects that it will incur financial penalties in conjunction with any such settlements,” the bank said.
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The CEO of the bank, Ross McEwan, did not have reassuring words for investors beyond promises he will not tolerate the kind of behavior that lead to the forex manipulation scandal going forward . Mr. McEwan said: “This is going to be another tough year. There are still many conduct and litigation hurdles looming on the horizon. I am looking forward to the day we can focus entirely on the future and not deal with any legacy issues.”
In February, RBS outlined a restructuring objective to drastically reduce operations in 25 out of the 38 markets in which the bank operates. Analysts say the RBS restructuring could result in 14,000 employees being terminated, but Mr. McEwan avoided all questions on job cuts yesterday and only said RBS was moving towards being “a safer, stronger” bank.