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Banks continue to report losses: RBS £794million

August 6, 2015

banking

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The RBS bank has reported a statutory loss before tax of £794million after suffering losses from its exposure to the Greek Financial Crisis and from the Payment Protection Insurance (PPI) Scandal.

The news follows an announcement from the Lloyds Banking Group who also reported pre-tax losses of £3.3bn over the past 6 months.

RBS’s loss comes after a £1.2bn profit in 2013, signalling the tough times ahead for the banking industry.

The massive loss is being blamed on the Greek financial crisis. The bank has written off its exposure to Greek Debt (mainly to Greek Government bonds) which is £733m. RBS also suffered from the Payment Protection Insurance (PPI) scandal. The bank allocated £850 million to cover claims for mis-selling PPI to its customers. Although Lloyds banking group came off much worse in the scandal with a £3.2bn compensation bill.

Since RBS is 84% owned by UK taxpayers the losses give the government and public more worry for the future. With news of sluggish UK economic growth, the Euro crisis, and the chaos in the US markets, there is little hope for financial stability in the near future.

RBS chief executive Stephen Hester has said that he believed the turmoil on the markets over the last few days, which saw RBS shares plummet on Thursday, showed the 2011 financial disaster was “not a banking crisis” but “one of global economic imbalances”.

Despite all the economic worries and RBS’s losses, Hester said the bank’s restructuring was “going well”, and added “We are getting risk down, the bad assets that have been dogging us from past years are coming down, and I feel comfortable with the way that part of the RBS plan is unfolding.”

How do you view the latest announcement from RBS? Do you think there is worse to come?

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