RBS share price: what next as new CEO Alison Rose takes charge this week

Alison Rose will take the helm at Royal Bank of Scotland this week, but with the lender facing a myriad of challenges she has a tough task ahead.

Alison Rose is set to take over from Ross McEwan as CEO of Royal Bank of Scotland on Friday, with the lender’s Q3 results last week highlighting the uphill battle she faces.

The bank reported an operating loss of £8 million in its third quarter, compared to the £961 million profit it made in the same period last year.

However, the disappointing set of results is due, in large part, to a £900 million charge relating to the mis-selling of Payment Protection Insurance (PPI).

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PPI scandal not the only challenge facing RBS

Without PPI, and other exceptional costs, the bank would have reported an operating profit of around £1 billion, though that figure would still fall far below market expectations.

Thankfully, the PPI scandal that has plagued the UK banking sector is largely over, with RBS paying around £6.2 billion in total.

However, RBS continues to contend with a myriad of challenges, with the mortgage market remaining competitive and low interest rates squeezing margins.

RBS unclear on investment bank’s future

Just like its rivals, RBS is looking to cut costs to offset its weak performance, but that is by no means an easy undertaking, especially when its investment banking unit recorded a £193 million loss in Q3.

Rose may look to shrink, or completely shut down, the investment bank, though that would leave RBS unable to service large corporate clients and could increase one-off costs in the form of redundancy payments.

A decision about its future will likely materialise in its full-year results next February.

You can go long or short RBS with IG using derivatives like CFDs.

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