LONDON-- Royal Bank of Scotland Group PLC's Coutts & Co has
put aside GBP110 million ($182.46 million) to cover potential
payouts to U.K. customers who may have been sold unsuitable
investments.
The 300 year-old private bank, which is part of RBS's wealth
arm, is undertaking a review of thousands of products that may have
been wrongfully sold to high net worth clients. In 2013 RBS took
provisions of over GBP206 million to cover issues in its private
banking division. On Friday it disclosed that GBP110 of that would
be aimed at its Coutts clients. The bank has started writing to
around 15,000 clients potentially affected.
The news comes as RBS considers the future shape of Coutts. RBS
is considering selling the international arm of the unit, as it
looks to place its private banking activities alongside its U.K.
commercial unit. The 80% U.K. state-controlled bank said it would
be tough for the international unit to hit a profitability target
of 15% return on equity "given the dynamics of compressed margins
and the increasing need for scale in international businesses."
Coutts has been the source of regulatory headaches for RBS in
the past. In 2010 the U.K. regulator fined RBS GBP5.6 million for
not keeping adequate controls to prevent breaches of
money-laundering rules at several units including Coutts.
Write to Max Colchester at max.colchester@wsj.com
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