RBS reveals £1bn loss and Swiss inquiry into Coutts subsidiary

Bailed-out bank says regulator has started ‘enforcement proceedings’ against Swiss arm over certain client accounts

Royal Bank of Scotland has revealed that Swiss authorities are scrutinising its Coutts subsidiary as it reported a near £1bn loss for the first three months of 2016.

RBS said the Swiss regulator, the Swiss financial market supervisory authority (Finma), had “opened enforcement proceedings against Coutts & Co Ltd (Coutts), a member of the RBS Group incorporated in Switzerland, with regard to certain client accounts held with Coutts”.

Ross McEwan, RBS chief executive, said it related to “the international private bank that we no longer own” and did not elaborate.

While the bank reported a statutory £421m profit for the first quarter of 2016, a £1.2bn payment to the government meant that shareholders would see a £968m loss. A £226m charge was taken for the sale of a shipping portfolio.

The loss, and problems selling off its Williams & Glyn network to comply with a demand from the European Union, have raised questions about the prospects of RBS paying dividends to shareholders before 2018 – in turn impeding the government’s ability to sell off any more of its 73% stake.

Its shares were the biggest fallers in the FTSE 100 on Friday, down 6% to 230p, following dismay that the bank would not be able to pay dividends to shareholders until it had found a solution to the disposal of the W&G network. On Thursday, RBS had admitted it was running the risk of missing a deadline of 2017to carved out this branch network, a move demanded by the EU at the time of its £45bn bailout.

Analysts lined up to express concern about the delay, which Gary Greenwood, analyst at Shore Capital, described as “farcical”.

Laith Khalaf, senior analyst at stock markets Hargreaves Lansdown, said: “The delay of the spin-off kicks dividend payments into the long grass, and probably means investors will have endured a decade-long dividend drought before the bank starts making payments again.”

Despite warnings from analysts that the W&G delay questions the management of the bank,McEwan said the team was “delivering on everything within our gift”.

McEwan continued to caution about the expected penalty from US authorities for the way it sold mortgage bonds – the so-called residential mortgage-backed securities (RMBS) – in the run up to the crisis. Analysts have calculated that this could amount to £8bn, although the bank could begin talks with individual states to try to reach settlements.

RBS, like other banks, also admitted it been asked by the Financial Conduct Authority for any links to the “Panama Papers”, the leak of 11.5m documents from the law firm Mossack Fonseca.

RBS has amassed £50bn of losses since the 2008 bailout. McEwan would not predict whether he expected the bank to make a profit for 2016 but said the bank was generating income of £1bn a quarter.

He has reined in the bank’s global ambitions and is shrinking operations to 13 countries, from the more than 50 during the Fred Goodwin era. As part of this, one of its main offices in London – 135 Bishopsgate, home to its investment banking operation – will be shut down, although this will leave two other premises in the Liverpool Street area of the City.