RBS chief says accounting obscures improved performance

RBS POSTED a loss in Q3 that its chief executive attributed to accounting rules obscuring improved performance at the bank. RBS took an £858m charge on the fair value of its own debt.

The bank also suffered an £825m charge on the fair value of its government-backed insurance policy the Asset Protection Scheme (APS). The APS is structured as a credit derivative, and movements in the fair value of the contract led to the charge. The value fell due to tightening credit spreads across the portfolio of assets covered by the scheme.

RBS’ core operating profit for the period stood at £1.7bn, but posted a loss of nearly £1.4bn before tax.

Stephen Hester RBS group chief executiveChief executive Stephen Hester (pictured), a former FD at Abbey National, said that accounting had covered up the improving operating performance at the bank, reported Sky News.

“The accounting treatment of some balance sheet items is volatile and can sometimes obscure our underlying story,” said Hester.

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