* 2013 loss 8.2 billion pounds
* Total loss since 2008 bailout 46 billion pounds
* Warns Scottish independence could hit credit rating
* Shares biggest fallers among European bank shares
By Matt Scuffham and Steve Slater
LONDON, Feb 27 Royal Bank of Scotland
sought to shake off its reputation as Britain's pariah bank on
Thursday with plans to cut more costs and reposition itself as a
UK-focused retail and commercial lender.
New chief executive Ross McEwan is under pressure to restore
RBS's standing with its political masters and the general public
after a year of fines, customer complaints and technology
The bank, which is 81-percent owned by the government, on
Thursday posted an 8.2 billion pound ($13.64 billion) pretax
loss for 2013 due to restructuring costs and misconduct charges.
That brings the total RBS has lost since it was bailed out
in 2008 to 46 billion pounds ($76.53 billion)- just above the
amount taxpayers paid for its rescue during the financial
"We are the least trusted company in the least trusted
sector of the economy. That must change," McEwan told an
audience of employees and customers at The Trampery, a new
business hub funded by RBS in the east of London.
Analysts warned it would take time for investors to see the
benefit of the restructuring and there were high risks to the
plan. RBS stock was the top faller among European banking shares
, down 8 percent.
"We are sceptical of there being a lot of low-hanging fruit
in the cost-save department given 7 billion pounds in
restructuring charges taken under previous management," Jason
Napier, analyst at Deutsche Bank, who has a "sell" rating on the
McEwan said the bank would need to think about the
implications for its Edinburgh headquarters if Scotland voted in
favour of independence in September.
Insurer Standard Life said earlier on Thursday it
could move part of its business out of Scotland if it votes to
leave the United Kingdom.
RBS said independence would likely hit its credit ratings, a
move that would typically increase funding costs.
"This is a huge issue for Scotland and we are neutral and
won't do anything to raise the temperature of that vote," McEwan
RBS has become, as one parliamentarian put it this week,
"the unacceptable face of British banking". While taxpayers sit
on a paper loss of around 16 billion pounds, it has continued to
pay bumper bonuses.
This year, RBS is paying out 576 million pounds in staff
bonuses for 2013, down 15 percent on the year before. Britain's
deputy prime minister Nick Clegg later said on UK television,
that a lossmaking bank, "shouldn't be dishing out ever larger
McEwan, who has waived his bonus for last year, defended
the payouts, which had been agreed with UK Financial
Investments, the agency that manages the government stake.
"We need to be pragmatic. I need to pay these people fairly
in the market place to do the job," he said.
RBS's global ambitions nearly felled the bank and it has
made huge progress in slashing 1 trillion pounds off what was
once the biggest balance sheet in the world.
McEwan wants to simplify the bank further by cutting its
divisions from seven to three, reducing investment banking and
shrinking its hundreds of committees.
He said the decision to focus the bank around three core
areas - retail, commercial and corporate - and to concentrate 80
percent of the bank's assets in the UK, from 60 percent now was
not politically motivated.
"This is our plan. We own it," he said.
The government pushed out McEwan's predecessor, Stephen
Hester, last year partly because of his continuing commitment to
the bank's large investment banking franchise.
Britain's finance ministry said McEwan's plan delivered the
government's vision for a bank focused on lending to British
businesses and families.
RBS is planning to cut costs by 5.3 billion pounds, or 40
percent, over the next three to four years, with 3.1 billion of
that coming from the sale of businesses such as its U.S. retail
franchise Citizens and the rest from cutting overheads.
In the meantime, RBS warned that there would be "elevated"
restructuring costs over the next two years to get the bank's
customer service up to scratch and its costs down.
Unlike Lloyds, which also received a state bailout
and has been selling its government-owned shares, RBS is years
away from privatisation.
"We need to recognise that we are not yet a strong enough
bank that can be privatised at a profit for the taxpayer in the
immediate future," McEwan said.
"There is no point avoiding this inconvenient truth."