* Expected to post 8 bln stg 2013 loss
* Bonus pot likely to spark political backlash
* Described by MP as the "unacceptable face of British
* Will shrink investment bank and international operations
* Could speed Citizens sale to bolster capital
By Matt Scuffham
LONDON, Feb 26 Royal Bank of Scotland's
new chief executive will unveil his turnaround strategy for the
part-nationalised lender on Thursday after announcing 2013
results expected to show an 8 billion pound ($13 billion) loss.
In an unconventional move designed to emphasise the bank's
new customer focus, Ross McEwan will present his plans to RBS
staff and customers at a venue in East London before talking to
investors and analysts.
But his plans for rejuvenating the bank, 81 percent owned by
British taxpayers after its 46 billion pound government bailout
during the 2008 financial crisis, risk being overshadowed by a
political backlash against plans to award more than 500 million
pounds in staff bonuses.
Three sources familiar with the matter said on Wednesday
that RBS had agreed with UK Financial Investments (UKFI), the
agency that manages the government's stake, that its bonus pot
for 2013 would total more than 500 million pounds but less than
the 679 million handed out in 2012.
RBS declined to comment on Wednesday.
The bank has faced criticism for paying bumper bonuses
despite being years away from returning to private ownership,
with taxpayers sitting on a paper loss of about 13 billion
pounds at current share prices.
"RBS remains the unacceptable face of British banking.
Unaccountable, unapologetic and gleefully greedy in paying
bonuses," said John Mann, a Labour lawmaker who sits on
parliament's Treasury Select Committee.
"This Bank remains propped up by the taxpayer, chequered in
its lending to business and clearly unable to understand the
anger of taxpayers at its inability to put its house in order."
YEARS OF LOSSES
Unlike rival state-backed lender Lloyds, which is
set to return to private ownership in the next year, banking and
political sources expect RBS to remain under state control for a
further three to five years. The bank has made a loss in each of
the six years since its bailout.
Banking industry sources expect McEwan, who took over from
Stephen Hester in October, to announce on Thursday that RBS will
continue to shrink its investment bank and international
operations, ceding to demands that it focuses on lending to
British households and businesses.
His predecessor resisted such a move, culminating in his
government-backed departure last year. McEwan is expected to say
that the bank will maintain only a downsized investment banking
business to service corporate clients.
McEwan, a 56-year-old New Zealander, joined RBS as head of
UK retail in 2012 from Commonwealth Bank of Australia
and was considered a safe, politically acceptable choice to
succeed Hester and increase the lender's focus on retail and
BAPTISM OF FIRE
However, his first five months in the role have proved
challenging, with the bank setting aside more than 3 billion
pounds to deal with past misconduct, raising concerns over its
capital position, while problems with its computer systems
affected more than a million customers.
McEwan's efforts to improve the image of the bank have also
been hit by damaging accusations from a government adviser who
claimed that RBS pushed viable small businesses into its
turnaround unit so that it could charge higher fees and take
control of their assets.
The bank is also under pressure to boost its capital after
Moody's placed its credit ratings on review last week.
RBS may look to speed the sale of its U.S. retail business
Citizens. It had planned a partial listing of Citizens this year
before selling the rest of the business by 2016 to bolster
capital, banking sources said. It is also considering the future
of its U.S. and Asian investment banking businesses.
Those measures and others are expected to result in the loss
of tens of thousands of jobs.
McEwan will be questioned over the bank's contingency plans
should Scotland vote to become independent of the United Kingdom
in September, but it has so far sidestepped the issue of whether
RBS would move its headquarters from Edinburgh.
Business Minister Vince Cable this month said it is
inevitable that RBS would move to London in the event of
Scotland becoming independent.