Royal Bank of Scotland’s chairman has welcomed the apparent softening of stance in the UK government on a hard Brexit, as the taxpayer-owned bank unveiled strong first-half profits yesterday.
At a results news conference, Sir Howard Davies was asked how he felt Theresa May’s government was conducting the negotiations for the UK’s withdrawal from the EU.
Davies said he was “not going to get dragged into a report card on the government”, but added that he sensed it had realised the potential damage a hard Brexit could inflict.
“In recent weeks we have seen a much greater realisation of the potential disruptive impact of a disorderly Brexit with a lack of transitional arrangements,” he said.
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“We have seen the government beginning to understand that this could be quite a serious act. There are potential serious consequences for London that could happen rapidly in an unplanned way if we don’t get transitional arrangements.”
The RBS chairman added that the banking industry was in a better place than three months ago “in terms of understanding across government that we need to smooth this transition some way”.
His comments came as RBS unveiled a £939 million profit, its first half‑year profit since 2014, and outlined contingency plans to use Amsterdam as a post-Brexit EU hub.
The profit in the six months to end-June compared with a £2 billion loss in the same period last year. Ross McEwan, group chief executive, said the bank had decided on Holland as a potential post-Brexit gateway to Europe because it already had a banking licence there from RBS’s acquisition of ABN Amro ahead of the financial crash.
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He said the Dutch office workforce was “not likely to be more than 150”, and would be focused on NatWest Markets, RBS’s sharply downsized investment bank.
The cost would be “in the low millions,” Ewen Stevenson, RBS’s chief financial officer, said. In the UK, McEwan said the bank had closed 150 branches this year as the pace of digital banking speeds up.
He added that more than 70 per cent of RBS customers’ banking needs are now met digitally, and the target was for this to be 90 per cent by 2020.
RBS was targeting £750m of cost cuts in the business over the full year, and this would involve further unspecified job cuts, McEwan said.
He also disclosed that the Financial Conduct Authority is investigating the bank in relation to money laundering, but would not elaborate.