£3bn wiped off RBS as it reveals turnaround plans

Tim Wallace
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RBS SHARES dived as the bank yesterday revealed an £8.2bn loss for 2013, and warned it will be years before there is even a chance of turning a profit on the taxpayer’s stake.

The latest losses mean the bank has now lost £45bn in the six years since the financial crisis struck, amounting almost exactly to the £46bn pumped into the bank by the government.

RBS’ shares fell 7.74 per cent, wiping around £3bn off the bank’s market capitalisation.

Chief executive Ross McEwan unveiled a new plan to dramatically slim down the bank’s operating structure, cutting back from seven divisions to three in a new bid to save money.

It could involve cutting up to 40,000 of its 120,000 staff over the next five years. McEwan said he will follow the industry trend of cutting back branches and high street staff as increasing numbers of customers bank online instead of in person. Suneel Kamlani, markets co-chief executive, and John Owen, International Banking chief executive, will leave the bank, RBS said yesterday.

Its investment banking arm will be cut back further as the bank seeks to exit overseas businesses as well as those where it is too small to make a strong return. It is also increasingly keen to sell its US arm Citizens, raising capital for the group and simplifying the overall structure.The bank lost £8.24bn in the year, above the £7.2bn market consensus and worse than its £5.3bn loss in 2012. Revenues fell 12 per cent to £19.4bn, largely on falling investment banking income, while operating costs fell only 3.9 per cent to £13.3bn.

Its Basel III capital ratio hit 8.6 per cent, up 0.9 percentage points, while its return on equity fell to 4.6 per cent, down from 8.9 per cent a year ago.

Despite the soaring losses RBS paid out £588m in bonuses. The figure is 18 per cent lower than the 2012 payout, but still attracted political fire. “We have to pay competitively,” McEwan said. “We need to retain skilled staff who could do the same job elsewhere.”

Meanwhile McEwan scrapped teaser rates across savings accounts and credit cards, which he hopes will show RBS cares more about long-term customers.

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