Regal Bank of Scotland has came back to profit for the first time in a 10 years as it continues its recovery.
Chief executive Ross McEwan informed the BBC it was “a actually symbolic moment. ”
The bank, which is majority-owned by the taxpayer, made an annual profit of £ 752m compared with a £ six. 95bn loss the year before.
RBS still faces the potentially massive fine from the ALL OF US Department of Justice over the sale for financial products linked to risky mortgages.
What happened to RBS?
RBS expanded quickly in the boom years of the 2000s, and in October 2007 led the consortium to buy Dutch bank ABN Amro for a massive £ 49bn, one of the largest deals in financial solutions history.
However , the particular timing of this deal turned out to be regrettable.
A crisis swept with the financial sector, property prices stepped, economies fell into recession plus banks lost billions.
At the height of the crisis, within October 2008, the Treasury needed to step in to bail RBS to £ 45bn.
Because the bank has been trying to get itself back in financial health.
In 2013, Ross McEwan grew to become chief executive, and he has turned the financial institution away from investment banking and in the direction of UK High Street banking.
When will the taxpayer recoup its RBS investment?
By BBC economics editor, Kamal Ahmed
After nine years whenever accumulated losses totalled £ 58bn pounds – today a representational profit for RBS.
Does it mean the government can start preparing more confidently about selling the 71% stake it holds on behalf of the particular taxpayer?
The fact the particular share price went down this morning simply by nearly 5% suggests not.
Investors are still nervous concerning the multi-billion pound fine the bank is usually expecting from the US.
At 269p, the RBS reveal price is still a long way below the particular 502p a share the government will have to break even on the billions of pounds this spent bailing out the bank about ten years ago.
It has already marketed some of its stake at a loss : and will have to continue on that route for a long period yet, in the hope that will eventually the share price will certainly rise above that 502p and, general, a profit can be made.
Ross McEwan told me it would get three to five years before the government could have a “much smaller” level of possession.
Selling the taxpayers’ stake in RBS has demonstrated a much tougher and longer procedure than anyone imagined a decade ago.
Whenever will RBS resolve its ALL OF US problems?
The sub-prime mortgage crisis came about after banking institutions started giving high-risk loans to the people with poor credit histories.
Risky mortgages would be packaged plan other loans, bonds, or resources, and sold on to investors because so-called mortgage backed securities.
RBS has been one of the banks accused by the ALL OF US Department of Justice of mis-selling these securities.
The financial institution had expected to settle the case within 2017, but is now hoping it is going to reach an agreement this year.
On Friday RBS set aside an additional £ 492m for US litigation, taking total set aside for US court motion around the sale of those products in order to £ 3. 2bn.
The issue complicates UK government programs to start selling down its risk in RBS.
“We have been constantly hit with the sins of the past with conduct plus litigation issues and I’ve been greatly restructuring the business to bring it back towards the UK, ” Mr McEwan stated.
What other problems does RBS face?
On Tuesday, after months associated with wrangling, MPs released a report by the economic regulator which mentioned a unit of RBS roughed up thousands of small firms.
The Global Restructuring Group (GRG) has been marketed as an expert service which could save a business, but according to the document took “inappropriate” action.
Mr McEwan said the particular report “did make for really tough reading”.
“We did not have it right for customers at the time they required us when their businesses had been struggling, ” he said.
“We just didn’t take care of them well enough”.
The bank has now put in place a problems process overseen by a former higher court judge, Mr McEwan additional.
How does the lender perform on gender pay?
For the first time, RBS published the typical pay gap between men and women within the bank, which it said had been at 37. 2%.
“Our gender pay gap displays an under-representation of women at older levels, ” the bank said in the annual report.
“That is not a satisfactory position and we understand that we still have much to do in order to narrow the gap. ”