Royal Bank of Scotland shares tumbled 6% on Friday making the prospect of a full Government sell-off of its 62% stake look ever more distant.
First-quarter financial results laid bare just how much work remains to be done by whoever succeeds chief executive Ross McEwan, who said yesterday he is stepping down.
His replacement is assumed be internal candidate Alison Rose, though chairman Sir Howard Davies has been insistent there will be a full search into possible external bankers.
The Government has said it wants to be free of RBS by 2023, selling off chunks of stock piecemeal. The shares fell 6% to 235p leaving the taxpayer, who bought in at 550p, sitting on massive losses. The Government gave RBS £45 billion to keep it alive in 2008.
Profit in the first quarter was £101 million lower than a year ago at £707 million. RBS blamed intense competition and Brexit uncertainty. One analyst said the figures look “messy” due to restructuring and litigation costs.
McEwan says the balance sheet will be much cleaner in future but warned that clients were holding off on investments. “This is a solid set of results set against a highly uncertain and competitive backdrop,” he said. “We continue to support our customers through this Brexit uncertainty while investing and innovating in digital services to meet rapidly changing customer needs.”
Ian Gordon at Investec said the figures show “the RBS recovery remains unfinished business. His successor will have his (or more likely her) work cut out”.
RBS’s full-year targets now seem to be under pressure. “We recognise that the ongoing impact of Brexit uncertainty on the economy and associated delay in business borrowing decisions is likely to make income growth more challenging in the near term”.
Revenues were flat at £3 billion, about £300 million lower than City analysts had pencilled in.
RBS confirmed it is investigating an alleged money-laundering scheme involving Russian and Lithuanian entities between 2006 and 2013. The bank said: “The reports allege ABN AMRO and Coutts were amongst those institutions. RBS is investigating these reports.”
McEwan, a 61-year-old Kiwi, will stay until a replacement is announced. He said he isn’t sure what he will do next, if anything. RBS has been paying £350,000 a year into his pension, a source of much anger from shareholders.
