RBS profits rise despite restructuring charge doubling to 1.1 billion pounds

State-backed Royal Bank of Scotland reported a rise in second quarter profit despite booking a 1.1 billion pound ($1.7 billion) charge for restructuring after accelerating the overhaul of its business.

In June the United Kingdom Chancellor George Osborne announced that the government would start selling down its holdings in RBS at a loss.

For the first half of the year, the bank recorded a loss of £153m after restructuring and litigation costs.

Chief Executive Ross McEwan has been leading the bank since October 2013, when he took over from Stephen Hester, who has since moved to RSA Insurance Group PLC.

Mr McEwan also admitted the IT failure last month that delayed payments and direct debits for thousands of customers over a number of days was “unacceptable”.

In February this year RBS said it would accelerate its plan to shrink, exiting a raft of countries and dismantling large parts of its investment bank.

“This is an appropriate backdrop to the sale of shares by the UK government, which will be a significant moment for this bank”.

He said management were working to ensure RBS is a bank “the country can again be really proud of”.

RBS said it planned to return capital to shareholders by paying dividends or buying back shares, but said it would not be in a position to do so until the first quarter of 2017 at the earliest.

The bank said it made an attributable profit of £293m during the period, up by more than a quarter since the same period last year – and against an expected loss of £260m. It is for the second consecutive time that the European financial giant has reduced its exposure in the U.S. consumer bank.

“Not least of which are the costs arising from litigation and conduct fines, the continuing unwelcome government stake and a sharp hike in restructuring costs given the accelerated programme the bank is undertaking”, he added. “Judging the ultimate scale of conduct costs remains extremely challenging”, said Hampton.