RBS reports a £134 million third quarter operating loss and warns costs relating to past misconduct could be substantially higher than expected. Meantime France's BNP Paribas posts a 14.5 per cent rise in net income. It comes a day after Deutsche Bank said it would be slashing 15,000 jobs. Analysts say despite the upheaval, the medium term outlook for investment banks is positive. Hayley Platt reports.
Paying for the sins of its past. British lender RBS says costs related to past misconduct could be higher than expected. That could hamper plans for the government - which still owns a 73 percent stake - to sell off more shares in the near future. The bank also reported a 134 million pound operating loss in the third quarter - compared to a profit of 1.1 billion pounds the year before. It comes a day after Deutsche Bank said it would slash 15,000 jobs in a move to bolster its finances as it faces costly litigation from its own scandals. But JP Morgan's Michael Bell says the upheaval in the industry should ultimately pay off. (SOUNDBITE) (English) GLOBAL MARKET STRATEGIST, JPMORGAN, MICHAEL BELL, SAYING: "Tougher regulatory requirements, so higher capital requirements mean that investment banks are having to restructure and cut costs as you've seen in the last couple of days. But in the medium term that should be positive for their ability to return returns which are higher than their cost of capitals. So we think that in the medium term it's a positive despite causing some volatility in the short term." Across the Channel, prospects were brighter for BNP Paribas. France's top bank posted a better-than-expected 14.5 percent rise in quarterly earnings, with net income hitting 1.8 billion euros. It's largely thanks to a scaling-back of its investment banking operations. BNP's shares were up 1.5 percent after the earnings announcement. Like its peers, it's also reportedly considering further cost cuts.