Bailed-out RBS posts annual loss of US$9 billion for 2012
By Danica Kirkas, APLONDON--Part-nationalized Royal Bank of Scotland said Thursday it ended 2012 with massive losses after it set aside more cash to compensate customers who were mis-sold financial products and to pay fines related to a rate-rigging scandal.
March 1, 2013, 12:26 am TWN
The bank, which is 82 percent owned by British taxpayers, said its fourth quarter losses increased 44 percent from a year earlier, to 2.6 billion pounds. That led to a full-year loss of 5.97 billion pounds (US$9 billion), up from a shortfall of 2 billion pounds in 2011.
It set aside 1.8 billion pounds to compensate customers who were mis-sold insurance and interest-rate hedging contracts. It also paid a 381 million pound fine for its role in rigging the London Interbank Offered Rate, which is used to price mortgages and credit cards around the world.
Chief Executive Stephen Hester focused on the progress RBS has made in its restructuring process — even as he acknowledged that it would take time to rebuild public trust dented by what he described as a “chastening year.”
“Along with the rest of the banking industry we faced significant reputational challenges as we worked with regulators to put right past mistakes,” he said in a letter to shareholders.
Operating Profit Almost Doubles
The bank cut down on bonus payments to staff, which amounted to 679 million pounds in 2012, from 789 million the year before.
Hester said the effort to restructure the bank, which was bailed out by the government in 2008, was entering the final phase, and that it would return to private ownership in the next few years.
Operating profit, a measure of earnings before tax and one-time charges, rose to 3.46 billion pounds last year from 1.82 billion pounds.
“I think we are coming really closer to the point where we are a normal company again,” Hester told the BBC.