Published: Sat, February 25, 2017
Markets | By Lucia Cruz

This taxpayer-owned bank has lost $74 billion in 9 years

This taxpayer-owned bank has lost $74 billion in 9 years

"The bottom line loss we have reported today is, of course, disappointing but given the scale of the legacy issues we worked through in 2016, it should not come as a surprise", said the RBS chief executive, Ross McEwan.

Restructuring costs amounted to £2.1bn as the bank continues to retrench from overseas countries to focus on United Kingdom retail and commercial banking.

RBS had received a 45 billion-pound bailout from the British government in 2008 after the global financial crisis exposed the excesses of an expansion drive that briefly made it the world's biggest bank.

He said that the group had got through most of the legacy issues that had "plagued" it, but "we are not completely done with the past".

RBS, bailed-out by the British government following the 2008 financial crisis, posted its ninth consecutive annual losses previous year.

Since its bailout almost ten years ago, the bank's losses have totalled more than £58 billion.

Mr McEwan is targeting £750m of cost savings this year, as part of a total £2bn of planned cuts over the four-year period, which is expected to involve hundreds of job losses and branch closures.

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The drive to improve performance will, however, require further cost cuts, RBS said. The bank is now facing a hefty fine from the US Department of Justice-perhaps between $12 billion and $20 billion-for selling dodgy mortgage-backed securities before the financial crisis. The bank says it can return to profit by 2018.

The bank also intends to invest heavily in technology at its NatWest Markets business, replacing hundred of separate product databases with a single scalable platform.

Royal Bank of Scotland has cut employee numbers from about 170,000 employees to just under 80,000 over the past decade through redundancies and selling operations such as Citizens Financial Group Inc., a USA consumer bank.

The US bank's analysts said: "We believe that under CEO Bill Winters, StanChart is pursuing a more sustainable LT (long-term) recovery strategy, albeit one that will take time to deliver".

The bank's shares were trading 3.6% lower in London after its annual results were released.

The huge net loss was mostly fueled by reserves the bank set aside to settle allegations with USA authorities over its role in the sale of mortgage-backed securities.

As you'd expect, McEwan offers up some positives - such as its core business generating £4.2 billion in adjusted pre-tax operating profit for the year - an average of £1 billion per quarter for the last eight quarters.

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