THE Royal Bank of Scotland Group lost more money than any other bank in the world last year, according to an industry-wide survey published yesterday.
Overall losses of £36 billion during a disastrous 2008 put RBS at the top of a list compiled by the Banker magazine, ahead of ailing American giant Citigroup, which lost £32bn.
HBOS, which lost £9bn last year and had to be rescued from nationalis
ation through a takeover by Lloyds TSB, is sixth on the list of big losers.
Edinburgh-based RBS is now 70 per cent owned by the taxpayer and in the process of shedding tens of thousands of jobs, partly in an attempt to recoup some of last year's losses.
RBS was the world's fifth-biggest bank when it was sent plunging to its UK record losses by a mammoth write-down on its acquisition of part of Dutch rival ABN Amro at the top of the market in 2007, as well as by soaring bad debts.
The bank's overall statutory losses were £40.7bn in February, but this now stands at £36bn as a result of the effects of conversion from the US dollar.
However, an RBS spokesman insisted yesterday that its losses had been artificially inflated in the Banker survey because of the way the ABN Amro deal was done.
He said the ABN Amro losses had been written against the RBS balance sheet, when they were actually shared by others in the consortium that bought the Dutch bank.
The spokesman insisted this meant RBS's losses were £16bn less than recorded by the magazine, putting it in the middle of the ten biggest losers, not at the top of the list.
He said: "The loss attributable to RBS shareholders in our 2008 results was £24bn.
"The fully consolidated results show a loss before tax of £41bn, which reflects £16bn of write-downs attributable to the Fortis stake in ABN Amro subsequently acquired by the Dutch state."
Former chief executive Sir Fred Goodwin, who oversaw RBS's ill-fated expansion programme, agreed last week to give up part of his controversial £703,000 annual pension.
But the bank came under yet more fire this week after details emerged of a £9.6 million pay-and-shares package for his replacement, Stephen Hester, who is charged with turning around the ailing business.
Stewart Hosie MP, the SNP's Treasury spokesman, said: "RBS was a world-leading bank, and it is important we learn the lessons of the past to ensure this cannot happen again.
"We must work to secure jobs across the financial sector and to rebuild our banking sector to support Scottish business and homeowners."
At the other end of the spectrum, US investment bank JP Morgan topped the list of the world's strongest banks by tier one capital – a key measure of their financial strength.
On this measure, HSBC was third overall – and also the highest-ranked bank not to receive any kind of state aid.
HSBC's pre-tax profits slid to £6.5bn in 2008, but it called on investors for a UK record £12.5bn in a rights issue earlier this year to strengthen its finances.
Brian Caplen, editor of the Bankermagazine, said those banks that stuck to the basics – taking deposits and lending in their home markets – had fared best.
The most profitable ones were the Industrial and Commercial Bank of China, the China Construction Bank and Spain's Santander.
Mr Caplen said: "These banks stuck to the basics of banking and did not get involved in some of the more complicated and highly- leveraged financial instruments that caused so much damage at banks like Citigroup, Royal Bank of Scotland and UBS.
"In the case of Spain, they were helped to do so by the strictures of a tough national regulator," Mr Caplen added.
"In future, banks will be run much more conservatively. Regulators will require them to hold more capital and be less leveraged.
"This will reduce the profits of the industry as a whole, but will bring about a safer banking system."
