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RBS and IAG lead London top flight lower

Published 29/04/2016

The FTSE 100 Index fell 40.9 points to 6282.5
The FTSE 100 Index fell 40.9 points to 6282.5

The London market opened on the back foot, after Royal Bank of Scotland (RBS) reported a first-quarter pre-tax loss of £968 million - more than double last year's figure of £446 million.

The bank said the loss reflected the impact of its £1.2 billion payment last month to the Treasury to buy out a crucial part of its £45 billion bailout.

The FTSE 100 Index fell 40.9 points to 6282.5, after a series of disappointing corporate updates and following poor sessions in US and Asian markets.

In Europe, Germany's DAX and the Cac 40 in France both opened more than 1% lower.

Shares in RBS fell more than 2%, or 5.4p, to 239.5p, after it said the cost of restructuring at the bank came in at £238 million, with the lender expecting the number to grow to £1 billion for the year.

The bank has racked up annual losses for eight years in a row, as it bids to make itself into a smaller UK-focused lender after almost collapsing in 2008.

On Thursday, RBS warned of a greater-than-expected hit from plans to spin off its Williams & Glyn arm.

Richard Hunter, head of research at Wilson King Investment Management, said: "Unfortunately the 'to do' list at RBS continues to grow, with the delay and associated additional cost of divesting Williams & Glyn being the latest fly in the ointment for the beleaguered bank."

British Airways owner International Airlines Group (IAG) was the biggest faller in the top flight despite boosting profits on the back of its takeover of Irish flag-carrier Aer Lingus.

The airline group said its operating profit jumped more than five times to 155 million euro (£121 million) in the three months to the end of March compared with a year ago, despite the effects of the Brussels terror attacks.

But the group said March sales were affected by the Brussels attacks and the timing of Easter, adding it has also seen softer underlying demand for its key business and first-class seats.

It said as a result the firm would "moderate its short-term capacity growth plans".

Shares fell almost 4%, or 21p, to 530p.

The Restaurant Group slumped almost 23%, or 84.3p, to 290p, after it said it expects lower 2016 profits, due to challenging trading conditions, adding that chief executive Stephen Critoph would leave the business with immediate effect.

The firm, which owns the Chiquito and Frankie & Benny's chains, said that since its last update a month ago it has seen "a further deterioration in trading conditions".

It now says it expects full-year sales to be between 2.5% and 5% lower, which will see annual profit come in at between £74 million to £80 million.

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