Royal Bank of Scotland’s (RBS) wealth unit
reported a 20% surge in expenses due in part to increased IT and
staff costs and its £8.75m fine from the Financial Services
Authority (FSA).

RBS’s wealth unit reported £235m in expenses,
a £41m increase in the past three months, and £39m up on a
year-on-year basis.

“Expenses increased 20% largely reflecting
continued investment in international front office recruitment,
strategic technology initiatives, including the new Avaloq based
wealth management platform in the UK, regulatory projects and
changes in bonus accounting methodology,” the bank said

The division was handed an £8.75m fine, its
biggest ever, from the UK’s Financial Services Authority (FSA)
earlier this year for ‘serious, systemic’ shortcomings in its
systems on anti-money-laundering (AML) and money obtained through
corruption between 2007 to 2010.

AUM increases

 

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Meanwhile, total income at RBS’s wealth arm
was £290bn, a £10m increase compared to £280bn in 31 December 2011,
and £19bn up on year-on-year basis.

Operating profit at wealth unit decreased £28m
to £45m in the first quarter, while the cost per income ratio
increased 81%, 12% up since 31 December 2011, and 9% up on
year-on-year basis.

Assets under management (AuM) at the wealth
unit grew 2% to £31.4bn ($50.7bn) in the first quarter, and slumped
9% to £34.4bn on year-on-year basis.

“We saw an increase in client activity and
market gains, and evidence of the improvement has begun to show AuM
level and positive inflows of net new business. AuM and net new
business was positive particularly in Asia,” the bank said in its
1Q results.