Royal Bank of Scotland reported a net loss of £1.99 billion, or $3.09 billion, in the first half of the year. The bank recorded a £1.42 billion loss in the same quarter last year. Revenue fell 8%, to £13.29 billion. The bank’s net losses fell to £466 million in the three months through June 30, compared with £897 million during the second quarter of last year. The British government owns 82% of the bank after it received a bailout during the recent financial crisis.
Royal Bank of Scotland’s loss was a result of an accounting charge on its debt and other one-off charges. The loss came after it recorded a £2.97 billion accounting charge on its own debt. The company also set aside £125 million to compensate customers for a recent technology problem. The company earmarked a further £135 million as compensation for the inappropriate selling of insurance to clients.
The fallout from the European debt crisis affected the retail and corporate banking units and the bank’s operations continue to suffer from weak consumer spending. In response to the current economic climate, Royal Bank of Scotland has announced reductions its investment banking division. The division reported a 29.6% decrease in its operating profit, to £264 million, during the first half of the year.
Regulators are continuing to investigate Royal Bank of Scotland over its role in the reported manipulation of the London interbank offered rate, or Libor. The bank said it could not estimate the amount of future potential fines or when any announcement would be made about the Libor investigations. Stephen Hester, chief executive of Royal Bank of Scotland, said in a statement, “We are in a chastening period for the banking industry. The Libor situation is on our agenda and is a stark reminder of the damage that individual wrongdoing and inadequate systems and controls can have in terms of financial and reputational impact.”
Several of the company’s employees have been named as defendants in lawsuits connected to the rate-rigging scandal. The bank did not name the individuals implicated in the lawsuits. A number of individuals have been dismissed from the firm in relation to the inquiries and lawsuits.