Profits up for RBS

<p>The bank’s Q3 profits were up, following the sale of US bank, Citizens.</p>

Royal Bank of Scotland (RBS) has seen profits rise during the third quarter to £952 million from £896 million. The bank also booked a £1.1 billion gain from selling a stake in Citizens bank - RBS has been offloading parts of the US-based business for more than a year.

Just under three-quarters (73 per cent) of RBS is currently owned by the bank – it was bailed out by the UK government in 2008 and restructuring costs have risen to £847 million.

Revenues have dropped by £596 billion to £3.04 billion, partly as a result of shrinking its corporate bank. RBS has also warned that future litigation costs and past misconduct costs may end up being much higher than previously expected.

In a statement, the bank said: "Material further and incremental costs and provisions in respect of conduct and litigation related matters are expected, and could be substantially greater than the aggregate provisions RBS has recognised". It added that the timing and size of penalties is "uncertain".

Some £129 million has been set aside for litigation, This will mainly be for mortgage-backed bonds.

Restructuring the business

Excluding the one-off gain from Citizens, movements in the value of its own debt, and a large gain last year following a revaluation of the bank's loan book, RBS posted a quarterly loss of £213 million from a £260 million profit a year earlier.

Currently, the bank's chief executive, Ross McEwan, is working to restructure the business and establish a smaller bank. The strategy includes pulling out of many overseas businesses and cutting down on its investment banking operations.

Restructuring charges include £190 million, which was spent during the three months to September on separating Williams & Glyn. RBS was told to sell this group of branches under EU rules governing state aid.

On Friday morning (October 30th), RBS share prices dropped to 312.80 pence, down from the a previous close of 320.70 pence.

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