Royal Bank of Scotland posts biggest loss in six years
2014-02-27 11:49:44
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, compared with £5.2bn in 2012.
Ross McEwan, RBS' newly appointed chief executive, told the BBC the results were "very sobering".
Despite this increase, £576m was set aside for staff bonuses, a drop of 15% on 2012. Of that sum, £237m went to investment bankers.
Talking to the Today programme, Mr McEwan said it would take three to five years for the bank to recover.
"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.
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'
Royal Bank of Scotland Group
Last Updated at 27 Feb 2014, 09:33 GMT *Chart shows local time
| price | change | % |
|---|---|---|
| 330.20 p |
-23.80
|
-6.72
|
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.
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.
"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'
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 would "inevitably result in reduced staff levels".
"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."