The boss of Royal Bank of Scotland warned of more charges for past wrongdoing and a "further and faster" overhaul after another £1.3 billion hit for banking scandals sent it into the red.
Taxpayer-backed RBS posted half-year losses of £153 million against profits of £1.4 billion a year ago after setting aside the hefty charge and as it took after £1.5 billion in restructuring costs.
Chief executive Ross McEwan cautioned of more pain to come as the bank faces further fines for "conduct issues of the past", with RBS braced for settlement costs in the US related to mortgage backed securities, which have battered many of its rivals in America over the past couple of years.
RBS put aside £459 million of extra cash in the second quarter to cover fines and litigation, including mis-selling of complex interest rate products to small businesses and US mortgage securities.
The group and its US business Citizens are facing allegations that the group misled investors over the quality of mortgage backed securities sold in America in the run up to the financial crisis.
Its overall £1.3 billion bill for the half-year also includes fines for its role in the foreign exchange rigging scandal after it was hit with another US penalty of more than £400 million in May, as well as further compensation for payment protection insurance (PPI) mis-selling.
Mr McEwan said: "I don't like seeing losses and I'll not rest until these charges are behind us."
RBS, which is still 78% owned by the Government, also warned over further job cuts over the next few years as it seeks to ramp up restructuring efforts.
The group said job losses would impact its corporate banking business in particular, but did not provide further details on numbers or timing.
Mr McEwan said: "This year will continue to be a noisy year as we go further and faster with restructuring and with all the conduct issues of the past."
He also admitted the IT blunder last month that delayed payments and direct debits for thousands of customers was "unacceptable".
The group is still working through compensation payments to those affected and talking to regulators, although Mr McEwan said the financial impact to the group was "limited".
He insisted performance in the core bank was continuing to improve, with underlying operating profits for the half-year 2% higher year-on-year at £3.45 billion, with restructuring and conduct charges stripped out.
The bank's second quarter figures also suggested an improving picture, with attributable profits for the three months of £293 million - up 27% year-on-year.
RBS said its mortgage business had performed well during the second quarter, with gross new lending up 43% to £5.4 billion.
Mr McEwan refused to be drawn on the exact timing of any planned sale of shares in the bank by the Treasury, saying only that the plans to begin offloading the government stake was "welcome".
Chancellor George Osborne has already said he wants to start selling shares in RBS by the end of the year and it is thought this plan could begin as soon as September.
Mr McEwan said the upcoming US mortgage related charges are not likely to hamper any shares sale by the Government, saying the Treasury has acknowledged the bank is in "much better shape".
But the upcoming charges have put back any hopes of dividend payouts for investors or share buybacks until at least the first quarter of 2017.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: "The bank has swung to an unexpected profit for the (second) quarter, albeit a loss for the half year."
But he said a "a number of clouds remain".
"Not least of which are the costs arising from litigation and conduct fines, the continuing unwelcome government stake and a sharp hike in restructuring costs given the accelerated programme the bank is undertaking," he added.
RBS confirmed it was working towards spinning-off its Williams & Glyn arm next summer after resurrecting the brand to offload a chunk of its business to meet European rules on state aid following its bailout at the height of the financial crisis.
Competition authorities are currently looking at the impact on the market of the sale of Williams & Glyn, with their review expected later this year.
The banks also said earlier this week it would cut its stake in Citizens to around 21% with plans to sell up to 2.6 billion US dollars (£1.7 billion) of stock in the business.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here