The economic recovery and rising property prices in Ireland have allowed RBS to free £800m that it had set aside to cover losses on bad debt, the bank announced this morning. RBS shares spiked 3.5% after the bank issued a trading update today, ahead of its full Q3 results on October 31st.
RBS said £500m had been released from the £4.5bn provisioned to cover expected losses, or impairments, on assets in its euphemistically-titled Capital Resolution division, otherwise known as the ‘bad bank’ or RCR. Not the sort of place where you’d want to open a current account, this is where the 81% taxpayer-owned RBS has set aside the £29bn of assets it desperately wants rid of by the end of 2016.
The bank singled out improved economic conditions and Irish residential property prices as key to the better-than-expected performance in RCR and in Ulster, where it has been able to free up another £300m in provisions.