The Royal Bank of Scotland is set to have made up to £8bn in losses for 2013, an unscheduled trading statement revealed last night.
The bailed-out bank, which is over 80% taxpayer owned, is facing arguments over its pay policies after being hit by an extra £3.1bn over conduct and mis-selling issues.
In an unexpected statement published last night, the bank said it would take these provisions on top of a £4 to £4.5 billion loss, previously announced on 1st November 2013, incurred by the creation of its new “bad bank”.
The surprise announcement wiped £900m off the bank’s value and its shares fell 7.5p to 332.2p with further pressure expected to continue to pull it down during the course of today.
Ross McEwan, chief executive of RBS, said the bank is still facing problems due to bad decisions made by the bank’s previous management during the initial stages of the financial crisis. He said:
“The good news is we are now a much stronger bank and can manage these costs while still supporting our customers.”
Billions of pounds have been spent to resolve the conduct and litigation issues faced by RBS since it was rescued by the government in 2008. Yet Mr McEwan insists the path ahead looks clearer.
“We have restored our fundamental soundness and have the financial strengths to deal with issues like these. We will now become a much simpler, more effective bank for our customers and shareholders.” Mr McEwan said.
In 2008, the government bailed out RBS with £46bn of public funds and since then the bank’s share price has tumbled to less than one-third the price the government paid for it, says a report by the BBC.
This raises issues around whether the government will ever be able to reclaim the investment. Financial experts have reported in the BBC and Telegraph that they believe it is unlikely taxpayers will ever get their money back.