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RBS doubles annual loss in 2011, fourth since bailout

http://www.bbc.co.uk/news/business-17128477

 

The bank posted an attributable loss of £2bn in 2011, up from a loss of £1.1bn in 2010.

 

In reaction to the annual results, Chancellor George Osborne said RBS is "cleaning up the mess after the biggest bank bailout in history".

 

Last month chief executive Stephen Hester turned down his bonus of nearly £1m following political pressure.

 

On a pre-tax basis, last year's loss was £766m compared with £399m in 2010.

 

The difference between the attributable loss and the pre-tax loss was down to a tax charge of £1.25bn, which RBS described as "particularly high" and "primarily as a result of continuing Ulster Bank losses".

 

Last year, the company's share price fell 48% and now stands at under 30 pence. Shares gained 5% on Thursday.

 

Despite that performance, the bank paid out £785m in bonuses to staff in total last year.

 

"We all understand that a company that is making losses at the bottom line tests the patience of those who depend on it," Mr Hester said in the results.

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RBS is much less likely to bankrupt all of us than it was, but no one can be confident that it will ever be able to repay us”

 

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RBS: 'Two more years of pain'

 

RBS is 82% owned by the state after its £45.5bn bailout in late 2008 at the height of the financial crisis, when it posted the biggest annual loss in UK corporate history.

 

During 2011, the bank's profitability was boosted in the third quarter by an increase in the value of its debt.

 

Pay row

 

For 2011, RBS said its investment bankers will share a bonus pool of £390m.

 

But the BBC's business editor Robert Peston pointed out that, on average, pay for investment bankers fell 26% to £112,000 per head - which he described as "controversial" because the drop in that division's profitability.

 

"I understand people's anger and anxiety about inequalities in pay at a time when the economy is weak and many people are finding things tough," Mr Hester said.

 

"RBS alone cannot fix these wider issues if we are to achieve what is asked of us commercially. But we have led the way in changing how we pay our people."

 

The chancellor supported the bank's action on pay.

 

"We have made clear that RBS should be a backmarker in the industry when it comes to pay, so it's right that bonuses at the investment bank are less than half what they were last year and less than a third of what they were in 2009," said Mr Osborne.

 

But shadow business secretary Chuka Umunna said: "Having gone around lecturing other shareholders to take an active role in ensuring pay restraint in the country's boardrooms and the City, the prime minister has failed to practise what he preaches when it comes to the government's role as principal shareholder in RBS."

Greek debts

 

RBS reports several figures for profit and loss. Some include one-off charges and other items.

 

Two big costs contributed to last year's loss.

 

RBS had to set aside £850m to compensate people who bought payment protection insurance they didn't need.

 

 

The Royal Bank of Scotland has reported its fourth year of losses since the bank's bailout in 2008.

 

It also had to take a loss of £1.1bn on its investments on Greek government debt amid the ongoing eurozone debt crisis.

 

Without those charges and adjustments for bad debt, the so-called core bank, which includes NatWest, made a profit of £6bn - which was down almost 18% on 2010.

 

RBS has been selling off its "non-core assets" to revive its profitability.

 

The balance sheet has been reduced by more than £700bn from the peak of the crisis, it said.

 

"RBS and the economy are linked together. It's safe to say that if the economy recovers this year then RBS will likely make money this year," said Ralph Silva, who runs the consultancy firm, SRN.

 

"If you look at these numbers and take out the Greek issue and you take out the payment protection they actually broke even and that's a very positive first step."

 

The bank also said it had given more than 40 pence in every £1 lent to UK small and medium-sized businesses, which is more than was demanded by government targets, and provided 4,000 business loans each week on average.

 

Mr Hester was appointed chief executive at the end of 2008 to replace Fred Goodwin, who was recently stripped of his knighthood over the collapse of the bank.

 

RBS' chairman, Sir Philip Hampton, also gave up £1.4m worth of shares he was due next month.

 

Bonus culture 'rolls on' as RBS pays out £785m

http://www.heraldscotland.com/politics/pol...785m.1330052707

 

HE excessive bonus culture of Britain's banks "continues to roll on and on", Labour has insisted after the Royal Bank of Scotland unveiled annual losses of £2 billion but also paid out bonuses of £785 million to its staff.

 

The Edinburgh-based bank defended the practice of off-setting cuts to bonuses by boosting salaries, saying it reflected an "industry-wide rebalancing of pay away from discretionary awards". It stressed bankers at Global Banking and Markets (GBM), RBS's investment arm, were paid less than those at other investment banks.

 

An RBS spokeswoman told The Herald: "RBS needs to pay in line with the market but we continue to pay significantly less than the majority of our peers."

 

Company figures yesterday showed GBM bonuses were down 57% and total GBM pay was down 26% to £112,000 per person.

 

The spokeswoman added: "10,000 senior employees across the group, including the executive team, were not awarded a pay increase this year."

 

The average bonus for an RBS group employee was £5346, while for an investment banker it was £22,941.

 

George Osborne praised the bank's management for "cleaning up the mess after the biggest bank bailout in history" – £45.4bn – and stressed it was right RBS should be a "back-marker" on pay. "So it's right that bonuses at the investment bank are less than half what they were last year and less than a third of what they were in 2009," the Chancellor said.

 

However, Chris Leslie, the Shadow Treasury Minister, claimed Mr Osborne's comments were misleading as details in RBS's annual report showed the compensation ratio – the level of pay as a proportion of the company's income – had jumped from 32% in 2010 to 39% in 2011.

 

"Yet again the Chancellor has failed in his duties as the 82% shareholder in RBS and has done nothing to change the excessive bonus culture that continues to roll on and on" he said.

 

Unions said the RBS payout to its investment bankers would "infuriate the workforce", while Chuka Umunna, the Shadow Business Secretary, criticised David Cameron, saying: "Having gone around lecturing other shareholders to take an active role in ensuring pay restraint in the country's boardrooms and the City, the Prime Minister has failed to practise what he preaches when it comes to the Government's role as principal shareholder in RBS."

 

Harriet Harman, Labour's deputy leader who is visiting Scotland today, told The Herald that the "whole bonus culture needs fundamental readjustment" by providing more transparency on pay and securing a workers' representative on companies' pay committees.

 

Ms Harman, who as Shadow Culture Secretary will visit the BBC and STV offices in Glasgow, argued that the days of the bonus free-for-all were over. "There can never be a going-back to the situation where it was just untrammelled," she said.

 

RBS set aside £850m to compensate people who had been mis-sold payment protection insurance, while its losses on investments in Greek government debt amounted to £1.1bn.

 

Despite its overall £2bn loss, underlying figures showed some promise for the Scottish bank, triggering a 3% rise in shares. Core operations reported profits of £6bn, while bad debts were slashed by 20% to £7.4bn.

 

RBS said it had exceeded its lending targets, including to small businesses, as agreed between the top five banks and the Lib-Con Coalition last year.

 

Stephen Hester, the bank's chief executive who last month waived his £1m bonus, warned that the current pay row was "damaging" RBS's potential success, which, he insisted, was in everyone's interests. "No-one should be under any illusions. You can't have your cake and eat it. The noise around RBS is very damaging," he added.

 

He also told Channel 4 News last night at least 36 RBS employees had bonuses clawed back for poor performance this year.

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Are we not all just getting sick of this shit...? What happened to the principle that if you actually made PROFIT for your company then you could share in the rewards...? How on earth does posting £2bn in losses (and it's fourth year running of loss-making for RBS) possibly qualify as success..? Or a reason to get a bonus...? This culture of entitlement has to come to an end, I mean, it's not as if their basic salaries are exactly a pittance. Unless of course you particularly want to see more riots happen...

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