The Courier & Advertiser (Perth and Perthshire Edition)
Job cuts expected after bank announces £7bn annual loss
Massive cost-cutting drive after ninth consecutive year in the red
Royal Bank of Scotland (RBS) has reported a £7 billion annual loss and announced a major cost-cutting drive expected to result in large-scale job losses.
The taxpayer-backed bank has racked up nine consecutive years of losses and this figure represents a hefty increase on the £2bn loss the lender reported last year and is one of the group’s biggest since its Government bailout in 2008.
Chief executive Ross McEwan has ordered a £2bn four-year cost-cutting drive, expected to result in significant job losses and branch closures.
It will include £750 million of savings this year, but Mr McEwan refused to be drawn on how many jobs will be lost.
He said: “There will be job losses that we will have to go through to get this business back into shape.”
“I will not give job numbers out, I’ll talk to staff first before anyone else. The £2bn needs to come out and will be broad-ranging – people, property, across the board.”
He also addressed speculation surrounding his own position.
When asked if he expects to be at the bank next year, the New Zealander said: “I hope so. We have done a lot of hard work, and I sense this bank is on the turn.
“It’s my strategy, I’d like to see it concluded.”
The lender, which is 72% owned by the taxpayer, has been stung by billions in restructuring, conduct and litigation charges.
Yesterday’s figures take into account £10bn in legacy costs, including £5.9bn on conduct charges and a £2.1bn restructuring hit.
The group revealed recently it had set aside another £3.1bn ahead of an expected fine from US authorities, linked to the sale of mortgage-backed securities, which was included in the bank’s results.
RBS has now notched up losses totalling more than £55bn over the past eight years.
Shares in the bank fell by over 2% in morning trading.
Mr McEwan said of the results: “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.”
But Mr McEwan said he expects the bank to be profitable by next year and pointed to its underlying adjusted operating profit of £4.2bn, which strips out exceptional charges.
“We made good progress throughout 2016 against our strategy. Our core business generated £4.2bn in adjusted pre-tax operating profit for the year – that’s an average of £1bn per quarter for the last eight quarters,” he said.