RBS managed to absorb costly regulatory investigations into money laundering and the sale of an AIG fund at Coutts to post a wealth arm profit for 2012.
Coutts was fined £3.6 million in November 2011 for its distribution of the Alico Enhanced Variable Rate fund. This resulted in expenses rising at the private bank, and these exceptional costs increased again in March 2012 when the FSA fined Coutts £8.75 million for anti-money laundering control failures.
Overall expenses were £40 million higher at £871 million, as the group positioned itself for the retail distribution (RDR) review and developed new products and services.
This included the launch of seven RDR-compliant multi-asset funds, the Coutts mobile service and investments in the firms Dubai, Singapore and Mumbai arms.
Despite these expenses RBS' wealth arm, which includes Adam & Co and Coutts, managed to increase operating profit by £5 million, or 2%, to £253 million.
This gain was driven by an increase in net income from £645 million to £720 million, with higher lending and deposit margin volumes helping to power this.However, non-interest income fell by 2% as the gain from disposal of Coutts’ Latin American, Caribbean and African businesses was more than offset by a decline in fee income in the UK and lower investment volumes against the backdrop of economic uncertainty.