The bulk of the drain on profits, £1.5bn, has been set aside for various US Residential Mortgage Backed Securities litigation claims. A £500m provision for PPI and a £498m goodwill impairment charge relating to its private banking arm Coutts make up the remaining costs which will hit RBS profits.
A consumer campaign led by the Financial Conduct Authority to raise awareness of the 2018 deadline put in place to draw a line under PPI claims is expected to accelerate complaints. The bank expects this additional PPI provision combined with the money it has already set aside for PPI to be sufficient to cover the remaining complaints it will receive.
Chief executive Ross McEwan announced the £2.5bn costs would cause the bank to make a loss during his investor relations call.
In a statement, McEwan added: “I am determined to put the issues of the past behind us and make sure RBS is a stronger, safer bank. We will now continue to move further and faster in 2016 to clean up the bank and improve our core businesses. We’ve always been open about the scale of past issues facing RBS and although there is clearly much more to do, this announcement is a further step towards addressing legacy issues and building a great bank for our customers and delivering long term value for our shareholders.”
RBS will announce its full year results for 2015 on 26 February.
