RBS loses £5.16bn but boss sees 'light at end of tunnel'
Bank bailed out by taxpayers records hefty deficit but underlying performance is encouraging, says CEO
THE Royal Bank of Scotland, which is more than 80 per cent owned by the UK taxpayer, has reported a loss of more than £5bn for last year. But despite all the red ink the bank's staff will share a bonus pot worth more than £600m.
RBS's pre-tax loss of £5.16bn was a result of "spring cleaning", its chief executive Stephen Hester told Sky News. Most of the pre-tax loss came from a £4.6bn accounting charge for changes in the value of its own debt, but it also took a £450m hit from compensation paid to customers who were mis-sold insurance and coughed up £381m in fines relating to the Libor rate-fixing scandal.
Hester defended the bonuses on the BBC's Today programme, saying the £607m pool was much lower than previous years. He said his role is to "try to align RBS pay with things we want our people to do with customers and society as a whole". But he conceded that bonuses have been too high: "We need to make sure pay goes in line with what people do. There have been times when pay got out of line with contribution."
Last month Hester agreed to waive his own £1m bonus after Labour threatened to trigger a Commons vote over the controversial award.
Harry Wilson, the Daily Telegraph's banking editor, points out that the RBS loss is treble its £1.2bn deficit in 2011. But the news isn't all bad, he says. The bank's operating profits were £3.46bn in 2012, up from £1.82bn the previous year – the highest since its bail-out in 2008.
Hester also believes the bank's fortunes are finally improving. He warned that RBS faced "another choppy year ahead of us", but added that "the light at the end of the tunnel is coming much closer".
In a separate announcement RBS said it is to begin the process of selling some of its US business, Citizens Bank, on the stock exchange in about two years. The announcement was welcomed by Chancellor George Osborne, who said it was a sign the bank was focusing its attention on the UK.