LONDON: Royal Bank of Scotland's net losses narrowed in the second quarter, the state-rescued lender said Friday as it awaited the financial consequences of its role in the Libor rate-rigging scandal.
RBS, 82-percent owned by the British government after a massive bailout amid the global the financial crisis, said losses after tax stood at £466 million ($723 million, 594 million euros) in the April-June quarter.
The Edinburgh-based bank had posted a loss after tax of £897 million in the first quarter of 2011, the lender said in a statement.
RBS was hit in the quarter by charges totalling £310 million partly linked to an IT meltdown in June that left millions of clients without access to their accounts. It also took a hit on funds set aside to compensate clients who were mis-sold various products.
The bank is meanwhile on red alert in the event of potential financial penalties arising from the Libor rate-rigging scandal which has wreaked havoc at British rival Barclays.
"The Libor situation is on our agenda and is a stark reminder of the damage that individual wrongdoing and inadequate systems and controls can have in terms of financial and reputational impact," RBS said on Friday.
"This is the subject of ongoing regulatory investigation but our customers and shareholders should be in no doubt that we are taking it seriously.
"These issues together are hard to deal with but just as necessary a part of change from the past as the restructuring of our balance sheet," it added.
RBS confirmed that it had "dismissed a number of employees for misconduct as a result of its investigations" into alleged manipulation of Libor.
The lender added in the results statement that its half-year loss surged 40 percent to £1.99 billion following an accounting charge of £2.97 billion on changes to the value of its debt.
The bank's underlying performance was rosier, showing a first-half operating profit of £1.8 billion "despite a worsening economic backdrop and the further restructuring," said RBS chief executive Stephen Hester.
RBS said staff costs were 4.0 percent lower in the first half compared with a year earlier as it axed another 5,700 jobs.
In morning trade following the latest results, RBS shares jumped 5.0 percent to 214.8 pence, topping London's benchmark FTSE 100 index, which was up 0.92 percent at 5,715.53 points.
"There were no nasty surprises this morning in the RBS results, so despite falling profits and the still unknown extent of the Libor issue, the share price is up on the day," said Rebecca O'Keeffe, head of investment at data provider Interactive Investor.
Hester on Monday said Royal Bank of Scotland -- which received a £45.5-billion bailout following the 2008 financial crisis -- faced the prospect of fines linked to the Libor interest rate-rigging scandal.
"RBS is one of the banks tied up in Libor. We'll have our day in that particular spotlight as well," Hester told The Guardian newspaper.
In June, Barclays became the first bank to be fined as part of a global probe into suspected manipulation of the twin interest rates that are crucial to the operation of short-term financing and global markets.
Barclays was fined £290 million by British and US regulators for attempted manipulation of Libor and Euribor interbank interest rates between 2005 and 2009.
The fallout saw the resignations of three Barclays executives, including CEO Bob Diamond and some analysts are predicting that Barclays could face lawsuits costing it billions of pounds in costs and fines.
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