RBS Pays Off Emergency Loans Amid £1.4bn Loss
8:07am UK, Friday May 04, 2012
The Royal Bank of Scotland has made a £1.4bn pre-tax loss in the first three months of the year and confirmed it is set to pay off the last of the government loans it received at the height of the financial crisis.
The taxpayer-backed bank said it will repay £163bn in emergency loans from the US and UK governments by the end of next week.
RBS boss Stephen Hester hailed the bank's progress in "removing mistakes of the past" as it prepared to finish off paying the loans it took during the 2008/9 crisis.
This includes paying a final £5.7bn instalment towards the £75bn in loans it received from the UK government's credit guarantee scheme and the Bank of England's special liquidity scheme.
The other loans include £36.6b in emergency liquidity assistance from the Bank of England and some £52bn from the US Federal Reserve.
The progress means the lender can start paying out certain dividends that it was banned from handing out under bailout conditions.
Its announcement, as part of its first quarter results, follows a similar move by the other UK state-backed bank Lloyds Banking Group, which recently said it will have repaid all its £157bn in loans by the end of the year.
Despite RBS passing the significant milestone, the Government will still own 82% of shares in the bank after its £45.5bn bailout during the 2008 financial crisis.
The latest £1.4bn loss for the three months to March 31 compares to a £2bn loss over the same period last year.
In a further sign that the bank is on its was to recovery, it also reported better-than expected operating profit, of £1.2bn, compared with a loss of £144m the previous year and forecasts of about £800m.
But RBS also revealed it paid out £125m extra in compensation claims for mis-selling payment protection insurance over the first quarter of 2012 - as exclusively revealed by Sky News City editor Mark Kleinman earlier in the week.
It comes on top of the £1.065bn already paid out by the bank to compensate victims, and with Lloyds Banking Group taking a £3.575bn for PPI mis-selling, takes the the total bill for taxpayer-backed banks resulting from the scandal to almost £5bn.
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