RBS: McEwan goes Forth

The Forth Rail Bridge lost its status as a symbol of Sisyphean tasks a few years ago. Tough new paint made constant retouching unnecessary. But patching up Royal Bank of Scotland, whose Edinburgh campus lies a few miles to the east, still feels like a perpetual rather than an attenuating process.

Seven years after a bailout by the state, RBS goes on writing off billions. The total for one-offs on Thursday was £1.75bn and contained an £856m provision for such costs as a second round of fines for alleged Forex-fiddling. And this was just in the first quarter. The attributable loss was £446m, a £1.6bn year-on-year decline, compared with a £1.6bn operating profit before nasties higher up the P&L. The bank is set for a £2.8bn 2015 loss.

Analysts hope RBS will reverse out to a pre-tax profit of about £4bn in 2016. That year will be "Phase Three" in the timeline of chief executive Ross McEwan, when he believes RBS will return to something approaching financial health. This year he is on course to free RBS of its "bad bank" and two-thirds of its stake in Citizens of the US, while still cutting costs by £800m, despite a higher bank levy.

The tricky bit will be ensuring big writedowns and provisions cease by the same deadline. This would make it easier for the government to start selling its 81 per cent stake. But at RBS, as at other banks, such exceptionals have become the new normal.

The fact that the shares trade 11 per cent below tangible net assets indicates scepticism among investors that the bonfire of value is burning out. Mr McEwan sounded a little weary on an early morning results call. He's not the only one.

Pro-cyclical investor

Two cyclists, heading in different directions, stop at a crossroads.First cyclist: Just checking my sprockets are optimally aligned.Second cyclist: I needed to adjust my bike clips.FC: You're Michael Dobson, chief executive of Schroders, aren't you?SC: And you are . . . ?FC: I'm a hedge fund manager. Don't see many bikes like yours these days.SC: It's an old model. But it still works. I keep board papers in the wicker basket. I like your outfit. Colourful.FC: The streamlining shaves useful microseconds off finishing times. But you were caning it yourself, for an older bloke in a flannel suit.SC: Younger colleagues often ask when I'll be taking it easier. Are you in a race?FC: No. I needed some headspace to regroup. I've got a great momentum-driven algo. But I've been let down by the markets recently.SC: I just wanted a breath of fresh air after first-quarter results. We increased assets almost £20bn to £319.5bn.FC: Easily done when you're long and stocks are rising.SC: We did OK versus benchmarks, too.FC: But Schroders doesn't have any real star fund managers, does it?SC: That would divert attention from the collective achievement I have engineered. Must press on. I've a few miles more to cover before I hang up my bike clips.FC: I'll chill here. I'm expecting a call from a client on the west coast. Later!SC: Cheerio!The hedgie lies down under a hedge (appropriately) and goes to sleep. His phone does not ring. Dobbo swiftly dwindles to a dot on the horizon.

Tragic Arria

Arria NLG produces software that can supposedly turn numbers into expert reports written in English. Or as near to English as most experts are capable of writing. But how good is the programme? Could it, for example, have read Shell's first-quarter results on Thursday and emailed Arria staff the message: "Last one to leave, turn out the lights?"

Shareholders needed no such interpretative brilliance to realise that a 7.3 per cent cut in production costs at the oil major was bad news for the Aim-quoted tech start-up. Arria told them Shell had canned a contract worth $5m-$10m. Such sums, spread over three years, would not have been enough to turn Arria losses to profits. But it would have helped. As importantly, the deal gave the Aberdeen University spinout validation from a big name client.

Such bragging rights are useful for an early stage company that has to raise fresh capital to survive. Arria had an operating cash outflow of £6.3m in the year to September. Balance sheet cash was £1.7m then, since when Arria has raised another £400,000. The company must be running out of money fast

The shares dropped 66 per cent on Thursday, with the result that a meaningful equity raising would heavily dilute current shareholders who chose not to participate. Arria says it can cite big corporate customers other than Shell. A glance at the archives shows the most recent to sign up was BG Group. Which is being taken over by Shell. Gulp.

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