Five questions answered on RBS’s positive quarterly profit results

Investors react.

The bank that was famously bailed out in the 2008 financial crisis has posted its best quarterly profits for over a year. We answer five questions on RBS’s latest figures.

How much pre-tax profit has the bank made?

The bank has made a pre-tax profit of £826m, this is compared to a £1.5bn loss in the same period in 2012 and a £2.2bn loss in the final quarter of last year.

What has been the bank’s response to these positive results?

In a video statement on the bank’s website, Chairman Sir Philip Hampton said he expects the government to start selling shares in the bank from the middle of 2014, or possibly earlier, so the bank can return to privatisation.

He said any such sale would be "terrific for the country".

The government owns an 82 per cent stake in the bank after it bailed it out in 2008.

What else did Hampton say?

"Our balance sheet is substantially fixed... our operating profitability has come through quite strongly," he said.

"What we want to do is have a business that is performing well... enabling the government to start selling shares from, let's say, the middle of 2014 on - it could be earlier, that's a matter for the government - but certainly we think the recovery process will be substantially complete in about a year or so's time."

If the government sold its shares in the next year or so would they be getting a good deal?

It’s not known how much the government would sell its stake for, but currently, RBS shares are valued at 407 pence a share on the government's accounts. However, the government paid 502 pence a share during the bailout.

According to the BBC’s business editor, Robert Peston, this suggests the Chancellor, George Osborne, could opt to sell at the lower price and still claim to be getting fair value for the 82 per cent taxpayer stake.

This would result in a return to shareholders after the government invested billions in the bank five years ago.

How have investors reacted to the quarterly results?

Despite Hampton’s optimism, investors have reacted negatively, with RBS shares falling more than 4.5 per cent in the first 10 minutes of trading on the London Stock Exchange.

RBS. Photograph: Getty Images

Heidi Vella is a features writer for Nridigital.com

Photo: Getty
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Why a Labour split may be in the interests of both sides

Divorce may be the best option, argues Nick Tyrone. 

Despite everything that is currently happening within the Labour Party - the open infighting amongst party officials, the threat of MPs being deselected, an increasingly bitter leadership contest between two people essentially standing on the same policy platform – the idea of a split is being talked down by everyone involved. The Labour Party will “come together” after the leadership election, somehow. The shared notion is that a split would be bad for everyone other than the Tories.

Allow me to play devil’s advocate. What the Corbynistas want is a Labour Party that is doctrinarily pure. However small that parliamentary party might be for the time being is irrelevant. The basic idea is to build up the membership into a mass movement that will then translate into seats in the House of Commons and eventually, government. You go from 500,000 members to a million, to two million, to five million until you have enough to win a general election.

The majority of the parliamentary Labour party meanwhile believe that properly opposing the Tories in government through conventional means, i.e. actually attacking things the Conservatives put forth in parliament, using mass media to gain public trust and then support, is the way forward. Also, that a revitalisation of social democracy is the ideology to go with as opposed to a nebulous form of socialism.

These two ways of looking at and approaching politics not only do not go together, they are diametric opposites. No wonder the infighting is so vicious; there is no middle way between Corbynism and the bulk of the PLP.

I understand that the Labour MPs do not want to give up on their party, but I don’t see how the membership is shifting in their favour any time soon. Most talk around a split understandably comes back to 1981 and the SDP very quickly yet consider this: the most defections the SDP ever achieved were 28. If there was a split now, it would probably involve the vast majority of the PLP, perhaps even 80 per cent of it – a very, very different proposition. There is also clearly a large number of people out there who want a centre-left, socially democratic, socially liberal party – and polls suggest that for whatever reason the Liberal Democrats cannot capitalise on this gap in the market. Some sort of new centre-left party with 150+ MPs and ex-Labour donors to kick it off just might.

Of course, a split could be a total disaster, at least in the short term, and allow the Tories further general election victories over the next decade. But let’s be honest here – given where we are, isn’t that going to happen anyhow? And if a split simply results in what happened in the 1980s recurring, thus eventually leading to a Labour Party capable of winning a general election again, would members of the PLP currently wondering what to do next not consider it worth it just for that?

Nick Tyrone is Chief Executive of Radix, the think tank for the radical centre.