Royal Bank of Scotland (RBS) said on Friday that
it will probably face US financial penalties connected to the London interbank
offerred rate (LIBOR) rate-rigging scandal, as the British bank reported a net
loss in the third quarter of the year. It also added a £400m sterling charge to
cover the cost of the scandal of mis-sold payment protection insurance (PPI)
claims, to bring the total provision to £1.7bn. Meanwhile, subsidiary Ulster
Bank said it has provided €103m for costs associated with the crash of RBS's IT
systems earlier this year, which the bank called a ''technology incident."
Ulster Bank said its provision covers all operational costs associated with the
crash, as well as redress of €52m to 750,000 customers across Ireland.
RBS took an accounting charge of £1.5bn on the
value of the bank's own debt, while a year ago the result was boosted by a
bigger gain on the value of own debt.
RBS reported a loss of £1.4bn for the
July-September quarter, compared to a profit of £1.2bn a year earlier.
Group operating profit of £1.05bn was up from £2m
a year ago, and revenue income rose 6% to £6.4bn.
RBS, which is 82% owned by the British government
after receiving a bailout during the recent financial crisis, is under
investigation by a number of US regulators, including the Department of Justice
and Commodity Futures Trading Commission in the United States, about the role of
some of its employees in the potential manipulation of LIBOR.
Ulster Bank reported an operating loss of €306m
for the three months to the end of September.
The bank said its bad debt charges remained high
and they rose marginally to €415m in the third quarter from the same time last
Ulster Bank said that customer deposits were flat
in the third quarter compared to the second, and the IT systems crash had not
impacted flows. It added that retail and SME balances increased marginally in
the three month period.
On an annual basis, loans to customers fell by 3%
due to weak customer demand. while customer deposits declined by 8% due to
outflows of wholesale balances related to market volatility and the impact of a
rating downgrade in the second half of 2011.
The bank reported a third quarter operating
profit - - before impairment charges - - of €110m, up 12% on the previous
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