Ian Fraser: RBS' challenger bank Williams & Glyn is a 'microcosm' of the bank's problems
But amongst the near £1 billion in losses, Ian Fraser, author of the "Shredded: Inside RBS, the Bank That Broke Britain" said on BBC Radio Scotland that there are some positive points.
"[RBS CEO] Ross McEwan is always insisting there is a good bank inside, struggling to get out and there is some truth in that," he said in the radio interview.
He highlighted how profit before tax of was at £421 million in the first quarter.
However he warned that "overall, the picture is disconcerting" for RBS.
"Yesterday [Thursday], RBS shocked the City of London by admitting that the plan to demerge Williams & Glyn, which isn't really a separate bank because it has been part of RBS since the 1980s, has basically hit some serious obstacles. I hear from insider that the process in separating it, it s a disaster area," he said.
"The original bidder for W&G - Santander - withdrew from the offer. It was rumoured that its IT was inadequate and 'medieval.' I think the issue with W&G is a microcosm of the problems [RBS] is having."
. Over 2008 and 2009 it borrowed £45.4 billion ($70.1 billion), worth 500p per share, from the taxpayer and it has yet to pay it back. Under the terms of its deal with the EU, RBS has to hive off W&G, just like Lloyds did with the sale of retail unit TSB.
Late on Thursday, RBS said it is likely to miss the European deadline to sell off its challenger bank Williams & Glyn by the end of 2017.
Fraser said that hiving off W&G is "highly complex" due to the challenger bank being within the retail bank at RBS and the "archaic" IT systems are causing problems for the entire bank, not just W&G.
RBS said in its results on Friday that it will be spending a lot more than an originally planned £1.7 billion on upgrading its technology. In 2013, millions of customers were left unable to pay for goods and services or receive funds into their accounts, in the run-up to Christmas that year, due to a massive IT glitch.
But overall, Fraser rated RBS CEO Ross McEwan as "6 out of 10" for doing his job.
"I think one of McEwan's key goals is to get RBS to be the most trusted bank by 2020 - I would argue that he would struggle to do that. However, given the mess he inherited, he's doing a 6 out of 10 job," said Fraser.
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