RBS has admitted that costs relating to the Williams & Glyn sale have hit £1.5bn – and that the divestment will miss its deadline.
In an interim management statement for the third quarter of 2016, which show a £469m loss for this period, RBS outlined challenges emerging from ongoing plans to sell Williams & Glyn.
While the bank is discussing proposals with bidders (one of which is reported to be Clydesdale and Yorkshire Bank), it said none of those under discussion “can deliver full separation and divestment by December 31 2017”, so it will miss its deadline for the deal.
As the sale will be late the bank is in talks with the Treasury, and will face tough meetings with the European Commission, to agree a solution over its state aid obligations.
RBS’s management statement says: “We have had positive discussions with interested parties concerning a transaction related to substantially all of the business.
“These discussions are ongoing and may or may not lead to a viable transaction.”
As well as missing its deadline RBS now anticipates a restructuring charge of around £1.5bn in 2016, compared with previous guidance of over £1bn, as a result of extra Williams & Glyn charges.
The extra charges came about after the group terminated a programme to create a cloned banking platform.
Elsewhere in RBS’s divisions, UK personal and business banking showed an adjusted operating profit of £591m for the third quarter – £14m higher than the same period in 2015.
RBS said increased income and in this division offset increased impairment losses.
These impairment losses, for the first nine months of 2016, hit £67m in UK personal and business banking.
During the same period, litigation and conduct costs in personal and business banking were £420m.
Across the whole RBS group, restructuring costs were £469m in the third quarter, a reduction of £378m compared with the third quarter of last year.
Litigation and conduct costs of £425m include an extra charge due to a recent settlement in the US.
This agreement was reached with the National Credit Union Administration Board to resolve two outstanding lawsuits relating to residential mortgage-backed securities.
RBS says it now has more than 4.3 million customers using its mobile app, with more than 20 percent of customers now exclusively using digital banking for day-to-day banking.
The bank its new ‘Online Account Opening’ service allows start-ups to submit an application online in 10 minutes and get a sort code and account number in under an hour.
By Marcel LeGouais