LONDON: Britain’s Royal Bank of Scotland has set aside £400 million for risks from probes into alleged rigging of the foreign exchange market, but switched sharply into third-quarter profit, it said on Friday.

This was the second such huge provision in two days by a leading British bank for possible costs and penalties arising from several probes into suspected price-rigging in the foreign exchange market.

The state-rescued RBS said that litigation and other charges for the third quarter included £400 million ($639 million, 509 million euros) of potential costs “following investigations into the foreign exchange market”.

Edinburgh-based RBS, which is 80-percent owned by the British government, revealed this one day after rival Barclays made a £500-million provision linked to global investigations into the £3-trillion-a-day forex market around the world.

“Various governmental and regulatory authorities in different countries have been conducting investigations into foreign exchange trading and sales activities apparently involving multiple financial institutions,” RBS said.

The lender added it was in discussions with authorities, including among others, the Serious Fraud Office (SFO) and Financial Conduct Authority (FCA) watchdog in Britain, and the Justice Department and other regulators in the United States.

“RBS is reviewing communications and procedures relating to certain currency exchange benchmark rates as well as foreign exchange trading and sales activity,” it said.

On a more upbeat note, RBS said that net profits rebounded to £896 million in the three months to the end of September, buoyed by easing charges for devalued assets, cost-cutting and the strengthening British economic recovery.

That contrasted sharply with a net loss of £828 million in the same period of last year.

“In February I placed trust at the heart of my new strategy for our bank. We have taken the first steps towards that goal, with early progress in making RBS simpler, clearer and fairer,” said chief executive Ross McEwan.

He was appointed last year to help turn around the lender and guide it back to private ownership.

“We are reducing costs, and are on track to achieve our capital targets. UK and Ireland are showing signs of growth, and impairment trends are significantly better than we had anticipated at the start of the year.”

He added: “But we know we still have a long list of conduct and litigation issues to deal with and much, much more to do to restore our customers’ trust in us.”

The bank’s balance sheet took a hit from £780 million of provisions for conduct issues, including the funds set aside to cover possible fines from the forex scandal.—AFP