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09th of August 2011
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RBS H1 profits hit by Greek crisis and PPI costs

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by Kay Mitchell

The Royal Bank of Scotland (RBS) has today unveiled a loss of £1.4 billion for the six months to the end of June.

The bank, which is 84% owned by the taxpayer, said its exposure to the Greek debt crisis and costs relating to the mis-selling of Payment Protection Insurance (PPI) pushed it into a loss.

RBS lent money to Greece’s Government which may now not be paid back in full because of the country’s debt crisis.

Meanwhile, PPI has been a hot topic for some time now and the Financial Services Authority (FSA) introduced a review of the insurance after millions of policies were mis-sold and thousands of complaints were received.

Under a PPI policy, an agreed sum of money is paid out each month to fully cover, or cover a percentage of the payment due on your mortgage or loan if you are unable to work, as a result of becoming unemployed or sick.

The bank made a provision of £850 million to cover costs for mis-selling PPI.

Today’s figures sent the bank’s shares down more than 13% in early trading today.

In the meantime, RBS said it lent £44.2 billion in the six month period - £15.5 billion of which went to small and medium enterprises (SMEs).

Under the Project Merlin deal, agreed earlier this year, the big five banks all committed to lend around £19 billion every quarter to SMEs.

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News posted: August 5, 2011

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