Member Article

RBS hit by PPI claims

The Royal Bank of Scotland has become the third bank this week to announce a hefty provision to settle compensation claims for mis-sold PPI.

RBS joined Lloyds banking group and Barclays, as it said a further £400m had been set aside to cover payment protection insurance claims.

The bank suffered a £1.3bn profit loss in the last quarter, in comparison with a £2bn loss for the same period last year.

Stephen Hester, Chief Executive of RBS group said that the bank’s restructuring strategy was going to plan, and excellent progress had been made.

An I.T failure over the summer, which caused branches of Natwest to extend their opening hours, and left many customers without money, was covered by a further £50m provision to cover compensation payments.

Potential Libor fines are also a concern for the group, and RBS warned on Friday that this could have an impact.

Mr Hester commented: “In tough economic times there is understandable debate about what economies need in order to achieve growth.

“In this debate we can be clear and unambiguous: RBS has the funding, capital and human resources to support our customers and meet their needs as the economy starts to grow again; and we have repaid the liquidity and credit support that was needed from government at the start of our restructuring journey.”

The Chief identified three main objectives for the bank to focus on: improved customer service, safe operation and the creation of sustainable value for shareholders.

He added: “The need to avoid repeating past credit mistakes and to make sustainable returns on a more conservative business model are also crucial aspects we need to balance in the face of many pressures.”

Lending in the third quarter rose by 3%, while UK small and medium businesses received £28.6bn in loans during the nine months up to the end of September.

This was posted in Bdaily's Members' News section by Miranda Dobson .