RBS recovery continues says boss despite high cost of Libor and PPI CHIEF executive Stephen Hester today insisted Royal Bank of Scotland was continuing to recover despite quarterly headline losses and an imminent fine for the bank's role in the Libor-manipulation scandal. Unveiling a two-thirds rise in core third-quarter operating profits to £1.6 billion, Hester said: "Our funding and capital position has been transformed, we have repaid all emergency loans from the government and central banks, and we have recently exited the Asset Protection Scheme without ever making a claim." Amplifying on the growing resilience of the partly taxpayer-owned RBS, Hester said: "Economic pressures are restraining customer activity and as a result banks are running hard to stand still in this environment. Nevertheless, resilient core bank performance at RBS provides resources for customers and for our clean-up, whilst signposting shareholder value in future. The bank's non-core assets fell £7bn to £65bn in the quarter and have been cut 75 per cent to date, while its bad-debt losses dropped £159 million from the previous three months to £1.2bn. RBS's core tier one ratio - capital reserves as a proportion of its loans - is now more than 11 per cent against 4 per cent at the time of the 2008 collapse. Its loan to deposit ratio is 102 per cent against 154 per cent at the crash. It was a different picture at the headline level, with an extra £400m provision for mis-selling payment protection insurance (PPI) helping drive RBS to a £1.3bn quarterly pre-tax loss. That compared with a £2bn pre-tax profit in the same period of 2011, and brings the group's total bill for PPI to £1.7bn. The cost of dealing with the fallout of the computer glitch that locked many RBS, NatWest and Ulster Bank customers out of their accounts last summer also rose £50m to £175m. Hester said the timing of any settlement with UK and foreign regulators on the Libor scandal was out of his hands. But he said he would be disappointed if potential financial penalties were not clearer by the time of the bank's annual results late next February. We have to dance to the tune of the relevant regulators. We are up for settling with all and every one as soon as they are ready," Hester added. The RBS boss said he felt it unlikely he would appeal to Brussels to relax or rescind the European Commission order for the bank to divest more than 300 branches following the collapse of the talks with would-be buyer Santander recently. I don't expect the EU to be of a mind to change their sanction. At the end, it [the branches] are 2 per cent of RBS," he said. However, Hester said that, following the flotation of RBS's Direct Line insurance business last month, a stock market listing for an independent branch business also remained on the table as well as a possible future sale of the assets. RBS got rid of another 9,900 jobs this year, reducing the payroll by 7 per cent. More than 35,000 jobs have gone since the turnaround programme began. Hester said of the recent staff cull: "That's by far the bulk of what we need to do." RBS's shares closed down 5.9p or 2 per cent at 281.3p.