RBS puts 100 million pounds aside to cover Brexit uncertainties

LONDON (Reuters) – The Royal Bank of Scotland has set aside an additional £ 100 million to account for potential bad debts resulting from Brexit-related uncertainty. This first concrete sign darkens the prospects of a large British bank.

This provision means that RBS is concerned that its clients will no longer be able to pay their debts when Britain leaves the European Union in five months.

While HSBC has set aside 245 million dollars (191.2 million pounds) in its half-year results to reflect the greater economic uncertainty, RBS is the first major British bank to associate the move to Brexit.

Chief Executive Officer Ross McEwan said RBS was taking into account the possibility of Brexit negotiations leading to more negative results, in line with new accounting standards that require banks to be better prepared for future losses.

"There is a lot more uncertainty in the market until we get an agreement, and that's what comes out of it," McEwan told reporters over the course of the year. 39, an appeal referring to this provision.

McEwan said this decision did not point to any particular problems in RBS 'loan portfolio, but reflected its low levels of depreciation after a decade of cleanup after its rescue from the state in 2008.

Shares of RBS fell 4% on Friday, the second worst performance of the European Banks' STOXX Index after the Irish group AIB.

The fortune of large lenders such as RBS is closely linked to the health of UK consumers and businesses.

The bank was less optimistic about the consequences of Brexit than some of its counterparts. McEwan recently warned that Britain could sink into recession if it leaves the EU without any agreement.

Sam Woods, deputy governor of the Bank of England, said Thursday that UK banks needed to have enough cash to resist any Brexit disorder that would hit the financial markets.

RBS's rival, Lloyds, said Thursday that he was confident that the talks between London and Brussels could still result in a withdrawal agreement, which remains elusive even after years of tense negotiations.

Both banks said they had found no evidence of borrowers' ability to repay their loans so far.

PROFIT MISS

McEwan said he had a phone call with Premier Theresa May and leaders last week and received an upbeat signal that an agreement on Brexit could be reached.

But with the imminent approach of the March 2019 deadline, companies still do not know how they will interact with the EU markets nor the impact that Brexit will have on the market. 39, British economy.

The provision, announced with the third quarter results of RBS, brought the bank's write-downs for the period to 240 million pounds, compared to 143 million pounds in 2017.

The bank reported a profit of 448 million pounds for the quarter, below analysts' expectations of 507 million pounds sterling.

RBS announced a Tier 1 capital ratio of 16.7%, well above its target of 13%, even after paying its first dividend in 10 years and imposing a hefty fine on US authorities earlier this year .

The bank took an additional £ 200 million for poorly protected payment protection insurance – the most expensive scandal of its kind in Britain, where RBS alone would spend more than £ 5 billion.

It gave no idea of ​​its future dividend policy – information shareholders are hunger-stricken after being deprived of payments for 10 years.