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| RBS boss admits 'chastening' year as losses breach £5bn | RBS boss admits 'chastening' year as losses breach £5bn |
| (about 2 hours later) | |
| Stephen Hester, the boss of Royal Bank of Scotland, admitted 2012 had been a "chastening" year as losses at the bailed-out bank widened to more than £5bn – while it still paid out more than £600m in bonuses. | |
| Hester, who is four years into his five-year plan to turn the bank round after a record £24bn loss in 2008, said he believed that privatisation of the bank was drawing nearer: "The light at the end of the tunnel is coming much closer". | |
| Sir Philip Hampton, RBS's chairman, said that the bank hoped the government would be able to sell a stake "as soon as possible" and that it would "be good if we could make that 2014". | |
| Asked what form any share sale would take, Hampton said: "My guess is that they [the government] will want British taxpayers to be able to participate in the availability of shares". | |
| Hester had earlier make clear that he hoped to spell out an important policy in 2014 to resume dividend payments to shareholders – regarded as important if the shares are to be sold off. | |
| The privatisation of RBS, in which the taxpayer has an 82% stake, will be a "seminal" moment, he said, appearing to indicate that he intended to stay on to see the task through. | The privatisation of RBS, in which the taxpayer has an 82% stake, will be a "seminal" moment, he said, appearing to indicate that he intended to stay on to see the task through. |
| "It would be terrific if RBS can being able to move from a period when people think of as a problem and people think of us an opportunity," Hester said. | "It would be terrific if RBS can being able to move from a period when people think of as a problem and people think of us an opportunity," Hester said. |
| The shares slipped 3% to 336p in early trading – which amounts to a near £15bn loss on the £45bn the taxpayer ploughed into the bank when it was bailed out in 2008. Ian Gordon, analyst at Investec, said that RBS was "starting 2013 in a weaker financial position than the market had anticipated". The bank insisted it would meet international targets for capital before the deadline in 2019. | The shares slipped 3% to 336p in early trading – which amounts to a near £15bn loss on the £45bn the taxpayer ploughed into the bank when it was bailed out in 2008. Ian Gordon, analyst at Investec, said that RBS was "starting 2013 in a weaker financial position than the market had anticipated". The bank insisted it would meet international targets for capital before the deadline in 2019. |
| This year's loss takes the total losses since the bailout to £34bn. | |
| Despite the loss, RBS has paid out £679m in bonuses, some £287m of which is to its investment bankers, although it did claw back £72m to penalise them for the £390m Libor fine. Labour said the public would be "astounded" by the bonuses. | Despite the loss, RBS has paid out £679m in bonuses, some £287m of which is to its investment bankers, although it did claw back £72m to penalise them for the £390m Libor fine. Labour said the public would be "astounded" by the bonuses. |
| The payment protection insurance scandal continued to weigh on the bank, which took a further £450m charge to take the total cost to £2.2bn, while the cost of the interest rate swap mis-selling scandal has required a further £650m charge. It took a £175m charge for its computer meltdown in June for which it warned it could face litigation. The bank warned again that "further financial penalties" could be incurred as Libor investigations continued in other countries. | The payment protection insurance scandal continued to weigh on the bank, which took a further £450m charge to take the total cost to £2.2bn, while the cost of the interest rate swap mis-selling scandal has required a further £650m charge. It took a £175m charge for its computer meltdown in June for which it warned it could face litigation. The bank warned again that "further financial penalties" could be incurred as Libor investigations continued in other countries. |
| Hester stressed that the bank's assets have been axed by £906bn since their peak in 2008 at the time of the £45bn taxpayer bailout. | Hester stressed that the bank's assets have been axed by £906bn since their peak in 2008 at the time of the £45bn taxpayer bailout. |
| "2012 saw landmark achievements for RBS. It was also 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. We are determined to overcome the cultural and reputational baggage of pre-crisis times with the same focus we have applied to the financial clean-up from that era," Hester said. | "2012 saw landmark achievements for RBS. It was also 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. We are determined to overcome the cultural and reputational baggage of pre-crisis times with the same focus we have applied to the financial clean-up from that era," Hester said. |
| Asked on ITV Daybreak if the taxpayer would ever get back its money, RBS chairman Sir Philip Hampton said: "I don't know. We'll do our best". | Asked on ITV Daybreak if the taxpayer would ever get back its money, RBS chairman Sir Philip Hampton said: "I don't know. We'll do our best". |
| Chancellor George Osborne claimed credit for the decision by RBS to "accelerate" its focus on UK retail and corporate banking by announcing a fresh streamlining of the investment bank and a plan to spin off part of US operation, known as Citizens, in two years' time. | Chancellor George Osborne claimed credit for the decision by RBS to "accelerate" its focus on UK retail and corporate banking by announcing a fresh streamlining of the investment bank and a plan to spin off part of US operation, known as Citizens, in two years' time. |
| "I have been very clear that I want to see RBS as a British-based bank, focused on serving British businesses and consumers, with a smaller international investment bank to support that activity rather than to rival it," the chancellor said. "The government's strategy is for RBS be a stronger and safer bank, which in time can be returned to full private ownership," he added, without giving any clues as to his preferred route for when a share sell-off can begin. | |
| Chris Leslie, Labour's shadow financial secretary to the Treasury, said: "The timing of the return of RBS to the private sector is a decision for ministers, but it must be based on the best long-term interests of the taxpayer, not driven by George Osborne's short-term political timetables." | Chris Leslie, Labour's shadow financial secretary to the Treasury, said: "The timing of the return of RBS to the private sector is a decision for ministers, but it must be based on the best long-term interests of the taxpayer, not driven by George Osborne's short-term political timetables." |
| The Financial Services Authority, which has been conducting a review of the entire industry's capital positions, has required the bank to "put its thumbs on the scale" with regards to its approach for provision for bad debts. | The Financial Services Authority, which has been conducting a review of the entire industry's capital positions, has required the bank to "put its thumbs on the scale" with regards to its approach for provision for bad debts. |
| On bonuses, Hester said that while the figure looked a "big number" it was below the £1.8bn being paid out Barclays and sums handed to out rivals at UBS and Deutsche Bank. He also signalled the bank risked igniting the row over City pay by disclosing in its annual report in March how many of its staff take home more than £1m, following a pledge by Barclays to do the same for the first time this year. He hit out against the bonus cap announced in Brussels, saying "incomes policies" had not worked well in past. | On bonuses, Hester said that while the figure looked a "big number" it was below the £1.8bn being paid out Barclays and sums handed to out rivals at UBS and Deutsche Bank. He also signalled the bank risked igniting the row over City pay by disclosing in its annual report in March how many of its staff take home more than £1m, following a pledge by Barclays to do the same for the first time this year. He hit out against the bonus cap announced in Brussels, saying "incomes policies" had not worked well in past. |
| RBS was forced to sell off its insurance business Direct Line by Brussels in return for the taxpayer bailout in 2008 and spun off a third of the operation last year, for which it has already been forced to take a goodwill writedown of £394m. The Edinburgh-based bank also needs to sell off 316 high street branches and after Santander pulled out of a deal to buy the branches last year, RBS will now breach an EU-mandated deadline to dispose of them by November. Hester said a flotation, under the old Williams & Glyn's brand, seemed most likely. | RBS was forced to sell off its insurance business Direct Line by Brussels in return for the taxpayer bailout in 2008 and spun off a third of the operation last year, for which it has already been forced to take a goodwill writedown of £394m. The Edinburgh-based bank also needs to sell off 316 high street branches and after Santander pulled out of a deal to buy the branches last year, RBS will now breach an EU-mandated deadline to dispose of them by November. Hester said a flotation, under the old Williams & Glyn's brand, seemed most likely. |