Royal Bank of Scotland has reported wider first-half losses, 1.3 billion pounds of new litigation charges and axed plans to turn its Williams & Glyn division into a stand-alone bank, as it braces for post-Brexit shocks to the UK economy. Hayley Platt reports.
Royal Bank of Scotland already had enough on its plate without the fallout from the Brexit vote. But half year results from the UK lender still shocked. (SOUNDBITE) (English) CHIEF INVESTMENT OFFICER, CCLA INVESTMENT MANAGEMENT, JAMES BEVAN, SAYING: "The RBS numbers were truly far worse than had been expected. There were higher restructuring costs and larger provisions. And I guess that the particularly bad news for many investors is the premise that Williams and Glyn cannot now sensibly be floated as an independent entity." RBS said it wouldn't be "prudent" to build a new platform for Williams and Glyn in a low rate environment. But that means it won't reap the benefits from the division longer term. Those could now go to Spain's Santander - tipped as a possible buyer. (SOUNDBITE) (English) CHIEF INVESTMENT OFFICER, CCLA INVESTMENT MANAGEMENT, JAMES BEVAN, SAYING: "That's clearly very good news for Santander, clearly bad news for RBS where there had been a lot of expectation of value of creation." RBS is 73 percent owned by the tax payer and hasn't made an annual profit since 2007. Its losses for the first half of 2016 topped two BILLION pounds - far more than last year. Chief Executive Ross McEwan is trying to restructure. But charges and fines for litigation and regulatory misconduct keep mounting. Recent stress tests placed it among the bottom 15 lenders and shares have fallen 40 percent this year. (SOUNDBITE) (English) CHIEF INVESTMENT OFFICER, CCLA INVESTMENT MANAGEMENT, JAMES BEVAN, SAYING: "I find it very hard to see how RBS can get fully back into the private sector when it has so many recognisable problems yet to overcome." And there's still another body blow to come. RBS is bracing for punishment over its part in the mis-selling of U.S. mortgage bonds in the run up to the financial crisis. Analysts expect the penalty to be the biggest in the bank's history.