Bank boss says sector has hit ‘new lows’ (From York Press)

RBS boss Stephen Hester says sector has hit ‘new lows’

10:34am Saturday 4th August 2012 in News

RBS boss Stephen Hester conceded that the banking sector’s reputation had hit “new lows” as the taxpayer-backed lender counted the mounting cost of its failures.

The 80 per cent state-owned bank set aside £310 million to deal with the fallout from an IT meltdown and two mis-selling scandals, while half-year losses doubled to £1.5 billion.

Unveiling the group’s half-year results, Mr Hester, a former pupil of Easingwold School , admitted the banking industry was in “a chastening period” and warned there was “some way still to go” in mopping up mistakes made in the years before the financial crisis.

But investors looked beyond headline figures and took cheer from an underlying performance in line with analysts’ expectations, sending RBS shares four per cent higher. The bank said the computer glitch on June 19 that locked many RBS, NatWest and Ulster Bank customers out of their accounts would cost it £125 million.

But the lender warned the full cost of the failure could rise and a further update would be given in the third quarter.

RBS unveiled a £135 million hit to cover the cost of payment protection insurance (PPI) mis-selling, bringing its total bill to £1.3 billion, while it took a £50 million charge to compensate small businesses that were mis-sold complex interest rate swaps.

But Mr Hester, who waived his 2012 bonus in the wake of the IT debacle, said RBS had “undergone huge change for the better” and added the “fruits of change are visible in many areas”.