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RBS at 'advanced stage' of dividend talks as it launches bad bank
by David Campbell on Nov 01, 2013 at 07:30
Royal Bank of Scotland has said it is at an ‘advanced stage’ of discussions with the UK government, its majority shareholder, over the removal of its current ban on paying dividends.
Profits at the bank in the third quarter of the year near halved on the same period of 2012 as it accelerated efforts to draw a line under previous failures with the creation of a ‘bad bank’.
Shares in the company fell almost 4% at the market open, down by as much as 3.9% at 353.1p.
In a statement, the chancellor George Osborne said he fully supported the decision, which stops short of full operational division of the bank into continuing and impaired assets.
The group reported an operating profit of £438 million compared to £909 million in Q3 2012, and £931 million in the second quarter of 2013.
Legacy assets were run down by £8 billion to £37 billion over the period, down from a peak of £258 billion in 2008, with the bank saying that it will create an internal unit to manage its toxic loan book, estimating that around 55-70% of its outstanding liabilities would be moved across within two years.
‘While there is inevitable uncertainty associated with running down such assets, there is a clear aspiration to remove all these assets from the balance sheet in three years,’ it said in a statement.
The accelerated run down of risk assets would mean ‘entail accelerated and increased impairments’ over the final quarter of 2013 it added, to an estimated £4-£4.5 billion.
This would take place alongside a review of performance and efficiency measures as it attempts to re-orientate itself toward high street banking, expected to report by February 2014.
‘RBS has made a lot of progress since 2009,’ said incoming chief executive Ross McEwan. ‘As ever with any long and difficult job, a degree of weariness and even defensiveness has crept in.
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