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| Version 4 | Version 5 |
|---|---|
| RBS shares slide as losses continue | RBS shares slide as losses continue |
| (about 4 hours later) | |
| Royal Bank of Scotland (RBS) has reported a loss of £1.98bn for 2015, its eighth year of annual losses. | Royal Bank of Scotland (RBS) has reported a loss of £1.98bn for 2015, its eighth year of annual losses. |
| RBS shares fell 7% to 226.6p and remain well below the price the government paid for an 84% stake to save the bank in 2008. | |
| The bank, which came close to collapse at the height of the financial crisis, is still setting aside billions to cover past mistakes and fines. | The bank, which came close to collapse at the height of the financial crisis, is still setting aside billions to cover past mistakes and fines. |
| Even after all these costs are stripped out, profits are still falling. | Even after all these costs are stripped out, profits are still falling. |
| The annual loss is partly due to a £3.6bn charge to cover conduct and litigation costs, many of them in the US. | The annual loss is partly due to a £3.6bn charge to cover conduct and litigation costs, many of them in the US. |
| RBS also set aside another £2.9bn for restructuring, as it withdraws from 25 of the 38 countries it still operates in. | RBS also set aside another £2.9bn for restructuring, as it withdraws from 25 of the 38 countries it still operates in. |
| It added that it did not expect to pay a dividend to shareholders until at least next year, saying: "We now consider it more likely that capital distributions will resume later than Q1 2017." | It added that it did not expect to pay a dividend to shareholders until at least next year, saying: "We now consider it more likely that capital distributions will resume later than Q1 2017." |
| 'Work to do' | 'Work to do' |
| Underlying profits at RBS, which is still 73% government-owned, dropped to £4.4bn, from £6bn a year earlier. | Underlying profits at RBS, which is still 73% government-owned, dropped to £4.4bn, from £6bn a year earlier. |
| RBS said the fall in these profits was largely due to lower income from interest payments. | RBS said the fall in these profits was largely due to lower income from interest payments. |
| Chief executive Ross McEwan told the BBC's Today programme: "Low interest rates do hurt banks and it's very clear interest rates will stay lower for much longer now. | Chief executive Ross McEwan told the BBC's Today programme: "Low interest rates do hurt banks and it's very clear interest rates will stay lower for much longer now. |
| "The UK and Republic of Ireland have quite strong economies... but you are seeing a slowing down in a number of economies around the world and low interest rates do hurt banks." | "The UK and Republic of Ireland have quite strong economies... but you are seeing a slowing down in a number of economies around the world and low interest rates do hurt banks." |
| "We have still got a number of conduct and litigation issues - the largest of those is in the US - which we have to settle. Unfortunately that is not in our gift time-wise. | "We have still got a number of conduct and litigation issues - the largest of those is in the US - which we have to settle. Unfortunately that is not in our gift time-wise. |
| "We need to sell off Williams and Glynn which is the branch network we are committed to selling off by 2017, and we need to show a track record that we have got a very good bank underneath all these headline noises." | "We need to sell off Williams and Glynn which is the branch network we are committed to selling off by 2017, and we need to show a track record that we have got a very good bank underneath all these headline noises." |
| Analysis: Andy Verity, economics correspondent | Analysis: Andy Verity, economics correspondent |
| Last June, the Chancellor George Osborne told an audience at his annual Mansion House speech he would start selling the stake in RBS we purchased for £45bn in the crisis - and do so without delay. | Last June, the Chancellor George Osborne told an audience at his annual Mansion House speech he would start selling the stake in RBS we purchased for £45bn in the crisis - and do so without delay. |
| "It's the right thing to do for British businesses and British taxpayers. Yes, we may get a lower price than that was paid for it - but we will get the best price possible. For the longer we wait, the higher the price the whole economy will pay," he said. | "It's the right thing to do for British businesses and British taxpayers. Yes, we may get a lower price than that was paid for it - but we will get the best price possible. For the longer we wait, the higher the price the whole economy will pay," he said. |
| That is certainly true since then. That night the shares were worth £3.54 each. Today, after RBS (known best to most as the owner of NatWest) unveiled a £2bn net loss, the shares at one point dropped to £2.22. That's well under half the £5.02p we (the taxpayers) paid for them. | |
| Mr Osborne's desire to sell without delay was backed by the governor of the Bank of England Mark Carney and an independent report by the investment bank Rothschild. A stake worth £2.1bn was sold in August. | Mr Osborne's desire to sell without delay was backed by the governor of the Bank of England Mark Carney and an independent report by the investment bank Rothschild. A stake worth £2.1bn was sold in August. |
| But it's one thing to ask the taxpayer to lose a third of their much troubled investment. It's another to ask them to write off more than half - which would translate to a loss of about £25bn on what the taxpayer paid. | But it's one thing to ask the taxpayer to lose a third of their much troubled investment. It's another to ask them to write off more than half - which would translate to a loss of about £25bn on what the taxpayer paid. |
| Some in the City are now whispering - perhaps RBS would be worth more to us all if it were broken up and sold bit by bit. | Some in the City are now whispering - perhaps RBS would be worth more to us all if it were broken up and sold bit by bit. |
| 'Disappointed' | 'Disappointed' |
| Among the conduct and litigation issues RBS has put aside £600m to pay claims for the mis-selling of payment protection insurance in the UK. | Among the conduct and litigation issues RBS has put aside £600m to pay claims for the mis-selling of payment protection insurance in the UK. |
| RBS also said it had cut costs by £983m last year, and boosted net mortgage lending by 10% on a year ago to £9.3bn. | RBS also said it had cut costs by £983m last year, and boosted net mortgage lending by 10% on a year ago to £9.3bn. |
| Michael Hewson, chief market analyst at CMC Markets, said: "Every year we hope that the time has come for the bank to turn a corner and every year we return disappointed. | Michael Hewson, chief market analyst at CMC Markets, said: "Every year we hope that the time has come for the bank to turn a corner and every year we return disappointed. |
| "CEO Ross McEwan must be wishing he had never taken on the task of turning the bank around when he took over the reins in August 2013." | "CEO Ross McEwan must be wishing he had never taken on the task of turning the bank around when he took over the reins in August 2013." |
| Pay package | Pay package |
| The money RBS pays out in bonuses to staff was reduced by 11% to £373m for 2015. | The money RBS pays out in bonuses to staff was reduced by 11% to £373m for 2015. |
| Mr McEwan's salary and incentive pay has increased from 2014, when he received £1.8m. | Mr McEwan's salary and incentive pay has increased from 2014, when he received £1.8m. |
| In 2015, on top of Mr McEwan's £1m salary he was awarded a £1m "role-based" incentive, but has personally donated the sum to charity. | In 2015, on top of Mr McEwan's £1m salary he was awarded a £1m "role-based" incentive, but has personally donated the sum to charity. |
| Mr McEwan also said that in 2016 he would give half of this role-based pay to charity. | Mr McEwan also said that in 2016 he would give half of this role-based pay to charity. |
| However, he has also been given £1.347m as part of a three-year performance related award, and £350,000 in pension allowances. | However, he has also been given £1.347m as part of a three-year performance related award, and £350,000 in pension allowances. |
| Share sale | Share sale |
| Turmoil on the stock markets has meant that the government's plans to sell off more of its stake in RBS are likely to be delayed. | Turmoil on the stock markets has meant that the government's plans to sell off more of its stake in RBS are likely to be delayed. |
| In January this year, it suspended the sale of its final stake in Lloyds Banking Group. Taxpayers own just under 10% of Lloyds. | In January this year, it suspended the sale of its final stake in Lloyds Banking Group. Taxpayers own just under 10% of Lloyds. |
| In August, the government managed to sell a 5.4% stake in RBS at 330p a share, raising £2.1bn. | In August, the government managed to sell a 5.4% stake in RBS at 330p a share, raising £2.1bn. |
| The price was one third below the 500p a share paid by the government when it took its stake in the bank during the financial crisis, and represented a loss of about £1.07bn. | The price was one third below the 500p a share paid by the government when it took its stake in the bank during the financial crisis, and represented a loss of about £1.07bn. |
| Mr Hewson said: "It turns out the decision by the UK government to pare down... its stake in the bank in the middle of last year doesn't look such a bad decision after all, amidst a chorus of criticism that it was sold off too cheaply. That 330p price seems a long way away now. | Mr Hewson said: "It turns out the decision by the UK government to pare down... its stake in the bank in the middle of last year doesn't look such a bad decision after all, amidst a chorus of criticism that it was sold off too cheaply. That 330p price seems a long way away now. |
| "Unless there is some clear evidence that this continued drip feeding of negative news shows signs of abating, it is going to be very difficult to see a rebound in the share price, as shown by today's sharp falls." | "Unless there is some clear evidence that this continued drip feeding of negative news shows signs of abating, it is going to be very difficult to see a rebound in the share price, as shown by today's sharp falls." |