State-rescued lender confirms total losses since bailout level with 2008 state bail-out
– RBS has lost all the £46bn pumped in by the taxpayer (Telegeraph, Feb 27, 2014):
Royal Bank of Scotland has lost all the money invested in it by the taxpayer six years ago when the lender came close to collapse.
The bank has confirmed its total losses since its bailout have now drawn level with the £46bn pumped into it in 2008 in return for an 81pc stake.
RBS made a loss last year of £8.2bn, its sixth consecutive annual loss, taking its cumulative losses to £46bn.
The scale of the losses means that all the capital provided by the taxpayer has now been used up dealing with the toxic legacy assets on the bank’s balance sheet.
Losses at the bank came after it took a £3.8bn bill for customer mis-selling compensation and a £4.8bn impairment charge against the continued run down of its bad loans.
Excluding these costs, RBS reported an operating loss for the year of £2.5bn, with profits from its retail and commercial business falling 4pc year-on-year to £4.1bn, while its markets division reported a 58pc fall compared to 2012 making a profit of £638m.
Despite, the loss RBS said it had put aside £576m to pay staff bonuses for 2013.
Ross McEwan, chief executive of RBS, will use the results to set out his plans to turnaround the lender that has yet to report a profit six years on from its state-funded £46bn bailout in 2008.
Mr McEwan said his priority would be restoring trust in the bank, which is 81pc owned by the taxpayer, after a series of scandals.
“We want to be number one for customer service, trust and advocacy, in every one of our chosen business areas by 2020,” wrote Mr McEwan in a message to investors.
RBS operating structure will also be simplified and the business’s current seven divisions collapsed into three to reduce complexity and costs.
“Our three customer businesses will cover Personal & Business Banking, Commercial & Private Banking, and Corporate & Institutional Banking. Across the businesses we will have one management team, working to one joined-up plan,” he wrote.
RBS will embark on a new cost-cutting plan, and Mr McEwan said he would reduce the bank’s running costs by £5bn by 2017 in an effort to reduce the business’s cost to income ratio to about 50pc.
Mr McEwan has also set out how he will address RBS’s relatively weak capital base. At the end of last year the bank’s core Tier 1 ratio had fallen to 8.6pc, more than two percentage points lower than some of its peers.
Mr McEwan said he would be targeting a 12pc ratio by 2016 and that the rundown of the bank’s bad assets and the flotation of the US Citizens business would be the main boosters of core capital.
Citizens will be floated on the US market later this year and the RBS confirmed it had selected advisers for the multi-billion listing.
RBS shares fell 4.5pc as the stock market opened in London on Thursday.