RBS Slumps to Loss on Weak Investment Banking and £900 Million PPI Hit

Royal Bank of Scotland slumped to a loss in the third quarter after a poor performance from its investment bank compounded a £900m hit from the payment protection insurance scandal, the Financial Times reported. NatWest Markets, the once high-flying investment bank that has been drastically scaled back since the financial crisis, recorded an operating loss of £193m in the quarter after its rates trading business was bruised by a historic rally in government debt. RBS said that profits at its division that trades interest rate products was hit particularly hard in August, as a large number of its customers sought to make similar trades, squeezing liquidity and driving up the bank’s own hedging costs. NWM is three-quarters of the way through a four-year plan to shrink its risk-weighted assets and costs, but faces growing pressure to make more radical changes. Read more