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Royal Bank of Scotland reports ninth year of losses Royal Bank of Scotland reports ninth year of losses
(35 minutes later)
Royal Bank of Scotland has reported a £7bn annual loss as legacy issues continued to dog its performance in 2016. Royal Bank of Scotland has reported a £7bn annual loss as past problems continue to dog its performance.
Litigation costs, restructuring charges and other issues all contributed to the bank's ninth consecutive annual loss. It is the ninth year in a row that the bank, which is 72%-owned by the taxpayer, has reported a loss.
RBS set aside £5.9bn for conduct costs, including provisions for the US fine over mortgage-backed securities. The bank set aside more money to deal with legal action in the US and its abandoned attempt to spin off its Williams & Glyn business.
RBS - which is 72%-owned by taxpayers - is also planning cost savings, which will mean job cuts and branch closures. RBS plans to cut costs by £2bn over the next four years, which is likely to mean job cuts and branch closures.
Chief executive Ross McEwan said: "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.
"These costs are a stark reminder of what happens to a bank when things go wrong and you lose focus on the customer, as this bank did before the financial crisis."
The bank has racked up more than £50bn of losses since the £45.5bn taxpayer bailout during the financial crisis.
'Good progress'
A big chunk of RBS's loss in 2016 - which was more than triple the previous year's loss of £2bn - was down to it setting aside £5.9bn for fines and legal costs.
The US Department of Justice is pursuing the bank over the sale of mortgage-backed securities prior to the 2008 financial crisis.
RBS has also had to cover legal costs associated with payment protection insurance (PPI) mis-selling.
However, Mr McEwan said he expected RBS to return to profit by the end of 2018, and pointed out that when one-off charges were stripped out, the core business of the bank was making money.
"We made good progress throughout 2016 against our strategy. Our core business generated £4.2bn in adjusted pre-tax operating profit for the year," he said.
"This bank has great potential. We believe that by going further on cost reduction and faster on digital transformation we will deliver a simpler, safer and even more customer-focused bank."