Royal Bank of Scotland (RBS) reported better-than-expected operating profits Friday, but its finance director admitted that it and other U.K. banks are still paying the bill for sins committed before the credit crisis.
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By: Catherine Boyle Staff Writer, CNBC.com
Bruce Van Saun, finance director of RBS, told CNBC on Friday: 'Banks didn't live up to the standards of integrity or have the right culture during the lead up to the crisis and now we're paying for some of the sins of that'.
'We'll have to deal with some of these things and where we've done wrong we'll pay the fines or redress our customers'.
The bank's core operating profit came in at a better-than-expected £1.05bn ($1.7bn) for the third quarter, after the successful initial public offering of insurance division Direct Line. Including charges, the company reported a pre-tax loss of 1.26 billion pounds.
The bank had been expected to report operating profit of £700m for the quarter, and a statutory loss of £1bn.
However, it announced an additional 400 million pounds had been set aside for compensating consumers who had been mis-sold payment protection insurance (PPI) The scandal over mis-selling PPI is now the most costly in U.K. banking history, with a total bill of 12.3 billion pounds so far, which is expected to rise, according to U.K. consumer group Which?.
Van Saun said: 'Our safety agenda continues to make excellent progress. The core bank had a very resilient quarter in the face of a tough economic environment. And we continued to tick off milestones'.
'We have another 15 months to end the recovery plan'.
As well as the IPO of Direct Line, RBS also exited the government's asset protection scheme during the quarter. Its Core Tier 1 ratio, a key metric under new Basel III regulations, remained constant at 11.1%.
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