Royal Bank of Scotland posts first profit in a decade

The bank’s symbolic return to profit after its £45.5 billion bailout during the height of the financial crisis will be overshadowed by this last large, looming fine for crisis-era misconduct. (Reuters)
Updated 23 February 2018
0

Royal Bank of Scotland posts first profit in a decade

LONDON: Royal Bank of Scotland Group reported its first full-year profit since 2007 on Friday, but the symbolic moment was bitter-sweet for the bank which had hoped to get a multi billion-dollar misconduct charge out of the way instead.
The bank’s £752 million profit beat a company-provided average of analyst forecasts for a £592 million loss. But many had included in their estimates hefty provisions for a settlement with the US Department of Justice for misselling by RBS of toxic mortgage backed securities.
Some analysts put the charge as high as $12 billion. RBS had hoped to settle the case in 2017. If it had, this would have resulted in the bank’s 10th consecutive annual loss. Since 2008, RBS has booked £58 billion in losses.
The bank did not provide an update on the timing of the settlement, its last large remaining legacy issue.
Chief Executive Ross McEwan said in a statement this was out of the bank’s control but the bank could nonetheless begin to think about resuming payments of dividends or buying back its shares.
“With many of our legacy issues behind us, the investment case for this bank is much clearer and the prospect of returning any excess capital to shareholders is getting closer,” he said.
But for market watchers, the bank’s symbolic return to profit after its £45.5 billion bailout during the height of the financial crisis will be overshadowed by this last large, looming fine for crisis-era misconduct.
The issue weighs on RBS’s share price and complicates the government’s plan to sell down its 71 percent stake in the bank.
RBS took £764 million of provisions in the fourth quarter for conduct issues like its missale of payment protection insurance, which came in at £175 million.
Restructuring costs were £531 million for the quarter and £1.6 billion for the entire year.
Overall, the bank continued to drive down costs — a strategic aim that has seen it shed billions of pounds from the bank in recent years.
In 2017, it beat its overall cost reduction target of £750 million, taking out £810 million overall.


Iran rial plunges to new lows as US sanctions loom

Updated 12 min 58 sec ago
0

Iran rial plunges to new lows as US sanctions loom

  • The dollar was being offered for as much as 87,000 rials, compared to around 75,500 on Thursday
  • The currency has been sliding for months because of a weak economy

DUBAI: The Iranian rial plunged to a record low against the US dollar on the unofficial market on Sunday, continuing its slide amid fears of returning US sanctions after President Donald Trump in May withdrew from a deal on Tehran’s nuclear program.
The dollar was being offered for as much as 87,000 rials, compared to around 75,500 on Thursday, the last trading day before Iran’s weekend, according to foreign exchange website Bonbast.com, which tracks the unofficial market.
Iran’s semi-official news agency ISNA said the dollar had climbed to 87,000 rials on Sunday from about 74,000 before the weekend on the black market, and several Iranian websites carried similar reports.
The currency has been sliding for months because of a weak economy, financial difficulties at local banks and heavy demand for dollars among Iranians who fear the pullout by Washington from the nuclear deal and renewed US sanctions against Tehran could shrink the country’s exports of oil and other goods.
The fall of the national currency has provoked a public outcry over the quick rise of prices of imported consumer goods.
Merchants at the mobile phone shopping centers Aladdin and Charsou in central Tehran protested against the rapid depreciation of the rial by shutting down their shops on Sunday, the semi-official news agency Fars reported.
A video posted on social media showed protesters marching and chanting “strike, strike!” The footage could not be authenticated independently by Reuters.
Hours later, Information and Communications Technology Minister Mohammad Javad Azari-Jahromi said on Twitter that he visited the protesting merchants.
“I will try to help provide hard currency for (mobile) equipment (imports),” Azari-Jahromi wrote, adding: “The merchants’ activity has now gone back to normal.”
Some of the US sanctions against Iran take effect after a 90-day “wind-down” period ending on Aug. 6, and the rest, most notably on the petroleum sector, after a 180-day “wind-down” period ending on Nov. 4.
The rial has weakened from around 65,000 rials just before Trump’s announcement of the US withdrawal in early May, and from 42,890 at the end of last year — a freefall that threatens to boost inflation, hurt living standards and reduce the ability of Iranians to travel abroad.
In an effort to halt the slide, Iranian authorities announced in April they were unifying the dollar’s official and black market exchange rates at a single level of 42,000, and banning any trade at other rates under the threat of arrest.
But this step has failed to stamp out the unofficial market because authorities have been supplying much less hard currency through official channels than consumers are demanding. Free market trade simply went underground, dealers said.