State-rescued Royal Bank of Scotland on Friday posted a third-quarter net loss of 1.384 billion pounds on massive accounting charges and warned it would likely face fines over the Libor rate-rigging scandal.

The loss for the July-September period, equivalent to $2.28 billion or 1.726 billion euros, compared with a net profit of 1.226 billion pounds in the same part of the previous year, the bank said in a results statement.

RBS, which is 81-percent owned by the government after a huge bailout amid the global financial crisis, was forced into the red after taking a vast 1.455-billion-pound charge on changes to the value of its debt.

The Edinburgh-based lender also took another 400 million pounds hit to compensate clients who were mis-sold insurance. That took its total bill for the payment protection insurance (PPI) affair to 1.7 billion pounds.

And the group added that the cost of an IT meltdown in June had risen by 50 million pounds to a total of 175 million pounds.

At the same time, RBS sold another 7.0 billion pounds of non-core assets, while impairment losses were cut to 1.176 billion pounds, as it sought to reshape the business in order to return to profitability.

"The RBS restructuring programme continues to make excellent progress as we take the action needed to make the bank safer and stronger," said chief executive Stephen Hester in the earnings release.

"Our funding and capital position has been transformed, we have repaid all emergency loans from the government and central banks, and we recently exited the asset protection scheme without ever making a claim."

Turning to the Libor affair, RBS warned again that it would likely face financial penalties from the scandal which has already wreaked havoc at rival British bank Barclays.

"The group continues to co-operate fully with investigations by various governmental and regulatory authorities into its submissions, communications and procedures relating to the setting of Libor and other trading rates," it said.

"The relevant authorities include, amongst others, the US Commodity Futures Trading Commission, the US Department of Justice (Fraud Division) and the FSA, together with various other authorities in Europe and Asia.

RBS said that "a number of employees" have already been dismissed for misconduct as a result of the group's own investigations.

The lender is also cooperating with probes by competition regulators in a number of jurisdictions, including the European Commission, US Department of Justice (Antitrust Division) and Canadian Competition Bureau.

"The group expects to enter into negotiations to settle some of these investigations in the near term and believes the probable outcome is that it will incur financial penalties," it added.

"It is not possible to estimate reliably what effect the outcome of these investigations, any regulatory findings and any related developments may have on the group, including the timing and and amount of fines or settlements."

Last month, RBS left the government's toxic-asset insurance scheme in a move which was hailed by finance minister George Osborne as a step towards its return to the private sector.

And it also floated its insurance arm Direct Line Group, raising 911 million pounds from the sale of a 34.7-percent stake.

However, the bank did see an expected branch sale to Santander collapse in October, which it said was "disappointing". It has recommenced efforts to sell the 316 branches.

channelnewsasia.com