Royal Bank of Scotland (RBS) has reported a £7 billion annual loss and announced a major cost-cutting drive expected to result in large-scale job losses.
The taxpayer-backed bank has racked up nine consecutive years of losses and this figure represents a hefty increase on the £2bn loss the lender reported last year and is one of the group’s biggest since its Government bailout in 2008.
Chief executive Ross McEwan has ordered a £2bn four-year cost-cutting drive, expected to result in significant job losses and branch closures.
It will include £750 million of savings this year, but McEwan refused to be drawn on how many jobs will be lost.
He said: “There will be job-losses that we will have to go through to get this business back into shape.”
“I will not give job numbers out, I’ll talk to staff first before anyone else. The £2bn needs to come out and will be broad-ranging – people, property, across the board.”
He also addressed speculation surrounding his own position. When asked if he expects to be at the bank next year, the New Zealander said: “I hope so. We have done a lot of hard work, and I sense this bank is on the turn. It’s my strategy, I’d like to see it concluded.”
The lender, which is 72 per cent owned by the taxpayer, has been stung by billions in restructuring, conduct and litigation charges.
Today’s figures take into account £10bn in legacy costs, including £5.9bn on conduct charges and a £2.1bn restructuring hit.
The group revealed recently it had set aside another £3.1bn ahead of an expected penalty from US authorities, linked to the sale of mortgage-backed securities, which was included in the bank’s results. RBS has now notched up losses totalling more than £55bn over the past eight years.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “RBS is still paying for the sins of the past, though the bank is now saying that 2017 is going to be its last year in purgatory, and that shareholders can look forward to a brighter, more profitable year in 2018.
“That may well be the case, there is a decent bank inside RBS struggling to get out, but it’s those ‘one-off items’ which pop up with such alarming regularity which keep pushing the bank deep into the red.”