ROYAL Bank of Scotland is seven years on from the disastrous hubris and overreach that saw it sag discredited into taxpayer ownership and, at £24 billion, the biggest UK corporate loss in history.
Recovery has been a marathon, not a sprint. And the latest loss of not far off half a billion pounds for the first three months of 2015 shows it is not there yet.
RBS’s latest results share a theme with some others in the senior division of the UK banking sector. That is one of an underlying trading picture and the capital strength of the organisation getting better, but the more positive impression being spoilt by ongoing litigation and misconduct charges from both before and since the financial crash. It creates a curious impression of the banks both getting better and still being mired in problems simultaneously.
In RBS’s case, there is something of a continuation here of the theme of the recovery stewardships of both current chief executive Ross McEwan and his predecessor Stephen Hester.
With Hester, there would be regular updates on how he was clearing RBS’s bloated balance sheet from the bad old Fred Goodwin days, flogging off businesses as if they were going out of fashion, a major financial reconstruction job. But then legacy issues and charges would come back to bite the bank, overshadowing the major improvement in its financial health that was taking place.
With McEwan, it is more about progress in restoring RBS’s customer service reputation, Hester having done a lot of the heavy financial restructuring work.
But, again, as with this quarter’s disappointing loss, McEwan is also getting used to his good work under the radar on customer service being undone by those pesky exceptional items. It is unlikely that will change much in the next year or two.
But as the boss indicated yesterday, RBS will only be fully recovered as opposed to convalescent when it is making decent statutory, rather than underlying, profits; the dividend is restored; and the government starts selling down its stake in the bank.
The way things are looking, and with further litigation and misconduct hits likely to be waiting in the wings for a while year, it is not a case of holding one’s breath.