RBS shares dive as stalled sell-off delays dividend

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Shares in Royal Bank of Scotland dropped sharply today after the tax-payer-owned bank said a return to paying dividends will take longer than it had hoped. 

RBS said delays in separating off Williams & Glyn, which it was ordered to do by Europe following its £45 billion taxpayer bailout, and the need to settle multi-billion-dollar legal cases in the US meant the bank will not now start paying shareholders returns until after the first quarter of 2017. 

Analysts suggested this could well make it harder for Chancellor George Osborne to sell off more of the taxpayers’ 73% stake.

But RBS finance director Ewen Stevenson played this down, saying: “The delay in the dividend does not impact the long-term equity story on the bank which means the Treasury still has the ability to sell stock.”

RBS reported its eighth annual loss in a row. Its after-tax loss was £2 billion down from £3.5 billion in 2014 after another £3.5 billion charge for litigation and mis-selling and £2.9 billion for restructuring. Operating profits fell from £6 billion to £4.4 billion. 

Chief executive Ross McEwan said that while 2015 results were “noisier” than he would have liked, the bank had made real progress in taking out costs and improving its capital position. 

“We ended the year a simpler, stronger bank with a business anchored squarely in the UK and Ireland, focused on retail and commercial markets,” he added. 

It was also revealed that McEwan’s pay more than doubled last year from £1.8 million to £3.8 million. 

Chairman Sir Howard Davies defended executive pay at the bank, where more than 120 people were paid in excess of €1 million (£790,000) last year.

“They are paid appropriately in relation to their peers and we are certainly not paying as much as elsewhere,” he said. “They are strongly motivated by a task which they think is extremely worthwhile from the point of view of the nation.”

Davies backed off giving RBS’s support to the in campaign over Brexit. 

He said: “We have looked at the impact of leaving Europe on us as a business and it would be unwelcome, not least because in Ulster Bank we have a large bank in the eurozone. But we are not going to interfere in the broader political debate.”

RBS said it expects to hear the result of the Financial Conduct Authority’s probe into claims it forced small business borrowers into its turnaround division in order to extract higher fees and interest out of them towards the end of next month. That could mean another large fine and compensation claims.

RBS shares dropped 20p, or 8%, to 224p, which is less than half the average 500p paid by the taxpayer in the  £45 billion bailout.

Source Article from http://www.standard.co.uk/business/business-news/rbs-shares-dive-as-stalled-selloff-delays-dividend-a3190001.html

February 27, 2016 |
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