High street banking giant RBS has made its first profit since it came within hours of crippling Britain’s entire financial system a decade ago.
The bank, which owns the NatWest, Royal Bank of Scotland, Williams & Glyn and Coutts, ended last year £752 million in the black after a £6.95 billion loss in 2016. It last made a full-year profit in 2007, the year before the financial crisis, when it was the biggest bank in the world under the leadership of Fred “The Shred” Goodwin.
Since then RBS, still 70 per cent owned by the taxpayer, has accumulated losses of close to £60 billion.
Today chief executive Ross McEwan said: “This is a very special day for the bank — our best set of results for many years. The investment case for this bank is clear, the prospect of rewarding shareholders is getting closer.
“There is no more bad bank. This is a symbolic day. It takes a long time to change a culture. We are getting there, we are learning from the past.”
However, the return to profit may be shortlived as RBS still faces the threat of a huge fine from the US Department of Justice over the sale of financial products linked to risky mortgages.
A settlement, expected this year, would send RBS tumbling back into the red. Mr McEwan said settling the case was its “one major legacy issue”.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “RBS has broken its 10-year duck and managed to squeeze out a profit in 2017, thanks in large part to a big fall in litigation and conduct costs.”
But he called it a “stay of execution rather than a pardon” because of the multi-billion-dollar US case.
The results did not impress the City and RBS shares fell four per cent to 270p in early trading — only half the level at which the Treasury would break even on any sale of its holding.
Alistair Darling, the chancellor in 2008, has told how RBS warned him it only had “two or three hours” before its cash machines ran out, which would have triggered “complete economic and therefore social collapse”. Disaster was avoided by a £37 billion bail-out organised by Gordon Brown.