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RBS £4bn Writedown Keeps It Loss-Making

A £4bn writedown on its US business meant Royal Bank of Scotland (RBS) remained in the red in 2014, with the bank confirming a £3.5bn loss.

The annual loss marked the seventh consecutive year the part-nationalised bank has failed to achieve profitability however the figure was a marked improvement on 2013 when it lost £9bn.

RBS said it would have made a profit but for the money it had written off at its US bank Citizens, which was built up over 25 years, through what it called a “fair value adjustment”.

The bank

also confirmed a Sky News story of Wednesday evening that chief executive Ross McEwan was giving up his £1m “role-based allowance” for 2015, which is intended as a top-up to his £1m basic salary.

He had already decided not to take a bonus for 2014 and RBS said it was reducing the size of its total bonus pool for the year by 16% to £483m.

Sir Howard Davies, currently leading the Airports Commission, was to be its new chairman and he would replace Sir Philip Hampton from September, it added.

The bank said it had £2.2bn in litigation and conduct provisions during the year – money it set aside to cover the cost of previous misconduct.

It included additional provisions for the mis-selling of payment protection insurance (PPI) of £650m and provisions relating to investigations into the foreign exchange market of £720m.

The bank confirmed on Wednesday that it had suspended two further employees in connection with the currency-rigging investigation.

Operating profits were £3.5bn – the highest since 2010. – which RBS said reflected its restructuring efforts and renewed focus on the customer.

Mr McEwan said: “Our 2014 performance shows a strategy that is working. The strong execution against the targets we set now gives us a platform to go further and faster against this strategy.

“These results make clear that underneath the conduct, litigation and restructuring charges, we have strong performing customer businesses that are geared towards delivering sustainable returns for investors.

“What you see today is a bank that is on track and delivering on its plan; a bank that is able to deliver on its ambition to be number one for customer service and advocacy in the UK and Republic of Ireland”.

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