RBS lost £5.2bn in 'chastening' year

28 February 2013 Last updated at 20:12 GMT

RBS lost £5.2bn in 'chastening' yearRBS sign

Royal Bank of Scotland (RBS) has reported its fifth year of losses since it was bailed out by the government in 2008, hit by fines and mis-selling charges.

RBS boss Stephen Hester says restructuring has "defused an economic time bomb"
Royal Bank of Scotland (RBS) has reported its fifth annual loss since it was rescued by the government in 2008.
The bank made a pre-tax loss of £5.17bn, hit by a series of charges. The year before, it lost £766m.
In a statement, the bank said it had been a "chastening" year, during which it sought to "put right past mistakes".
It has set aside money to cover PPI mis-selling, the mis-selling of interest rate swaps and its fine for attempting to fix Libor.
RBS is 81% owned by the government.
Much of the pre-tax loss came from a £4.6bn accounting charge for changes in the value of its own credit, which is a measure of how much it would cost to buy back its own liabilities.
The bank has taken a £5bn charge for loan impairments, which are write-offs to cover loans that are unlikely to be repaid.
Of that figure, £1.4bn came from its Ulster Bank division, pushing it into a loss of more than £1bn.

Analysis

The rise in the operating profit is certainly an encouraging sign for RBS, allowing Stephen Hester to talk about light at the end of the tunnel.
But the footnote in the results that lists the factors excluded by operating profits runs to seven lines, covering embarrassing things like compensation for mis-selling PPI and interest rate swaps, and fines for trying to fix Libor.
Mr Hester says he hopes to have the worst of the skeletons out of the closet by the end of the year, because it is this cleaning up process that will make the bank fit to sell.
'Another choppy year'
It reported an operating profit of £3.5bn, which excludes all of the special charges and is a considerable improvement on the previous year's performance.
In a conference call for journalists, chief executive Stephen Hester warned of "another choppy year ahead of us", but added that "the light at the end of the tunnel is coming much closer".
The fine for attempting to fix the inter-bank lending rate, Libor, knocked £381m off the bank's profits, although it said it would be recovering £302m of that by reducing 2012 bonuses and clawing back previous ones.
It has taken a charge of £700m in the year for money it expects to have to pay out to cover mis-selling interest rate swaps.
It also took a £450m charge in the last three months of the year to cover mis-selling of Payment Protection Insurance, taking its total provision to £2.2bn.
RBS set aside £215m to pay bonuses to its investment bankers, which Mr Hester stressed was considerably lower than other comparable banks.
Mr Hester said that the list of charges was "a powerful critique" of where the banking industry had gone wrong in the past, but added that he was confident that the "biggest and most wrenching cases can be recognised by the end of the year".

Royal Bank of Scotland Group

Last Updated at 28 Feb 2013, 16:30 GMT *Chart shows local time Royal Bank of Scotland Group intraday chart
price change %
323.90 p -
-22.90
-
-6.60
He also told the BBC that the bank would be in a "condition fit to sell" before the next election in 2015, but added: "There is no guarantee that the shares will be worth more than the government paid for them by that time."
In a later news conference, RBS said it wanted to be able to give the government the option to start selling its stake in the bank as soon as 2014.
The initial plan may be to sell a quarter of the bank, with the rest being sold over the following few years.
Citizens sale RBS has announced that it is going to begin the process of selling some of its US business, Citizens, on the stock exchange in about two years.
The announcement was welcomed by Chancellor George Osborne as a sign of a greater focus on the UK.
"I have been very clear that I want to see RBS as a British-based bank, focused on serving British businesses and consumers, with a smaller international investment bank to support that activity, rather than to rival it," he said.
"I welcome RBS's announcement today to accelerate that strategy."
Treasury Minister Sajid Javid: "It's a choppy period in the financial markets but RBS are making the right decisions"
However, Chris Leslie, Labour's shadow financial secretary to the Treasury, cautioned against selling off RBS too soon.
"The timing of the return of RBS to the private sector is a decision for ministers, but it must be based on the best long-term interests of the taxpayer, not driven by George Osborne's short-term political timetables," he said.
"As Ed Balls said in 2011, any profits from the sale of government shares in the banks should be used to repay the national debt. That is the fiscally responsible thing to do."

More on This Story

Big Banking

Nenhum comentário:

Postar um comentário

Postagem em destaque

Ao Planalto, deputados criticam proposta de Guedes e veem drible no teto com mudança no Fundeb Governo quer que parte do aumento na participação da União no Fundeb seja destinada à transferência direta de renda para famílias pobres

Para ajudar a educação, Políticos e quem recebe salários altos irão doar 30% do soldo que recebem mensalmente, até o Governo Federal ter f...