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Royal Bank of Scotland posts £8.2bn pre-tax loss Royal Bank of Scotland posts biggest loss in six years
(about 1 hour later)
Royal Bank of Scotland (RBS) has reported its sixth annual loss since it was rescued by the UK government in 2008. Royal Bank of Scotland (RBS) has reported its biggest annual loss since it was rescued by the UK government during the financial crisis in 2008.
The bank's pre-tax loss for 2013 was £8.2bn. The bank's pre-tax loss for 2013 was £8.2bn, compared with £5.2bn in 2012.
However, excluding bad bank and legacy costs, RBS made an operating profit of £2.5bn. Ross McEwan, RBS' newly appointed chief executive, told the BBC the results were "very sobering".
RBS' bonus pool is down to £576m, a drop of 15% on last year, when £679m was paid out. Of that sum, £237m will be paid to investment bankers. Despite this increase, £576m was set aside for staff bonuses, a drop of 15% on 2012. Of that sum, £237m went to investment bankers.
The bank, which is 81% owned by the UK taxpayer, also set aside regulatory and redress provisions of £3.8m. Talking to the Today programme, Mr McEwan said it would take three to five years for the bank to recover.
It incurred impairments and losses of £4.8bn due to the establishment of a new internal "bad bank", known as RBS Capital Resolution (RCR). "People - including the executives of the bank - didn't realise how big a change process we had to go through to get this bank back into shape," he said.
Ross McEwan, RBS' chief executive, told the BBC the results were "very sobering". He added that RBS would now work on getting "back to good old banking where we have trust with people".
"We're in the least trusted industry and we're one of those banks that aren't trusted."
Shares in RBS fell sharply after the bank's reported loss, down to around 330p. The average price paid by the government in 2008 was 500p.
'Smaller, simpler''Smaller, simpler'
Mr McEwan has also outlined plans for RBS to become the "the number one bank for customer service and the most trusted bank in the UK" by 2020. Mr McEwan also announced that RBS, once one of the world's largest banks, would now work on shrinking its operations.
He said RBS would restructure its seven divisions and support departments to leave just three customer businesses: personal, commercial and corporate.He said RBS would restructure its seven divisions and support departments to leave just three customer businesses: personal, commercial and corporate.
Mr McEwan also said he plans for RBS to become the "the number one bank for customer service and the most trusted bank in the UK" by 2020.
The bank's cost-to-income ratio currently stands at 73%, but RBS has set a target of getting this down to about 55% by 2017.The bank's cost-to-income ratio currently stands at 73%, but RBS has set a target of getting this down to about 55% by 2017.
"This year, that will mean cutting around £1bn of operational spend on things that don't help our customers," a statement confirmed."This year, that will mean cutting around £1bn of operational spend on things that don't help our customers," a statement confirmed.
'Reduced staff levels''Reduced staff levels'
The company's results come a week after UK newspapers speculated that thousands of jobs would be cut at the bank over the coming year.The company's results come a week after UK newspapers speculated that thousands of jobs would be cut at the bank over the coming year.
RBS has not confirmed how many positions will be lost, but Mr McEwan said that "reducing costs and divesting businesses in the bank will inevitably result in reduced staff levels". RBS has not confirmed how many positions will be lost, but Mr McEwan said that reducing costs would "inevitably result in reduced staff levels".
"We do not yet have detailed plans for implementation," he added."We do not yet have detailed plans for implementation," he added.
"We will deal with such matters sensitively, talking to our staff before communicating any such changes.""We will deal with such matters sensitively, talking to our staff before communicating any such changes."