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RBS almost doubles annual loss to £2 billion

RBS almost doubles annual loss to £2 billion

Category: Investments

Updated: 23/02/2012
First Published: 23/02/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Royal Bank of Scotland (RBS) has announced that it saw losses almost double last year.

The 82% state owned bank posted losses of £2 billion in 2011, a marked rise from 2010 when losses amounted to £1.1 billion.

It is the fourth loss RBS has posted in the four years since 2008 when the bank was bailed out to the tune of £45.5 billion with public funds.

Contributing to the loss was £850 million that was set aside to repay customers who were mis-sold payment protection insurance, while it had to write off more than £1 billion from investments in Greece.

The group's chief executive Stephen Hester – who recently turned down a bonus of almost £1 million – said the restructuring undertaken 'is unique in its scale and complexity'.

"We all understand that a company that is making losses at the bottom line tests the patience of those who depend on it," he added.

"In dealing with these legacy losses we expect to put the company on a sustainable footing for generations to come. 2011 proved what we already knew: that there are no shortcuts to this endpoint."

On bonuses, the bank said that £390 million was paid to investment bankers, a significant fall from last year.

Other highlights include reducing the balance sheet by more than £700 billion from its peak, while it has reduced how much it relies on short-term funds.

RBS has also built-up its cash reserves to protect against the possibility of another banking crisis.

Its results show that RBS lent 40p in every £1 loaned to small and medium sized businesses last year, and that it beat the Government's Project Merlin target.

"Achievements like these require hard work," commented Philip Hampton, chairman of RBS. "The Board is committed to restoring RBS to good health."

"We also made comprehensive changes to the executive management team after 2008. I am confident that they, ably led by Stephen Hester, are the right people to rebuild RBS.

"All of us understand our duties and responsibilities and are determined to fulfil them diligently."

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