RBS profits almost wiped out on US fine

RBS

Profits at Britain's Royal Bank of Scotland almost evaporated in the second quarter after a vast US fine over its role in the notorious subprime crisis, the lender said today.

Earnings after taxation collapsed to just 96 million pounds (USD 125 million) in the three months to the end of June, RBS said in a results statement.

That compared with 680 million pounds in the same part of the previous year.

Operating profit halved to 613 million pounds over the reporting period. Edinburgh-based RBS was hit by 782 million pounds in litigation and conduct costs in the second quarter.

That helped to cover part of the vast settlement reached with US regulators earlier this year over claims it mis-sold mortgages in the run-up to the 2008 global financial meltdown and subsequent worldwide recession.

In May, RBS was fined USD 4.9 billion by the US Justice Department over its role in the subprime housing crisis but much of the cost had already been set aside, while the total was less than expected.

The lender remains majority-owned by the British government after receiving the world's biggest banking bailout at the height of the financial crisis.

In June, the rightwing Conservative government headed by Prime Minister Theresa May sold a 7.7-per cent stake in RBS, leaving it still with a controlling stake of 62.4 percent, much of which it plans to offload through to 2023.