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"Sins of the past" continue to haunt RBS

Friday, February 24, 2017 - 01:52

Royal Bank of Scotland reports a sharp rise in losses as higher misconduct charges and restructuring costs underscore the challenges facing the lender nine years after it was bailed out in the world's biggest bank rescue. Ciara Lee reports.

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In the red for a ninth consecutive year - Royal Bank of Scotland says it's shaking off "sins of the past". The bank reported a loss of almost 7 billion pounds for 2016. The government-backed lender has not made an annual profit since 2007. As the financial crisis hit, it was bailed out in the world's biggest bank rescue. (SOUNDBITE) (English) RBS CEO ROSS MCEWAN, SAYING: "This is what happens when a bank goes wrong and you have to put it right. Underneath this is still an amazing bank. We make one billion pounds pre tax profits every quarter and have done for the last 8. But then it gets hit with all the one-off charges, they've all been from the past, and some of those have been huge." RBS says 2017 will be the final year of losses as it hopes to close its darkest chapter. 2016's losses mainly due to a 5.9 billion charge for misconduct issues - analysts think it may need to pay US authorities nine billion pounds this year in settlements. The bank also plans to cut costs by 2 billion pounds - which will likely to hit its branch network where thousands of jobs have already been cut. (SOUNDBITE) (English) INDEPENDENT MARKET ANALYST, JEREMY BATSTONE-CARR, SAYING: "You have to bear in mind that the core bank has delivered a profit of four billion pounds here. So in actually fact the core operation is performing quite well. So you end up feeling extremely sorry for Royal Bank of Scotland staff, many of whom I suspect are going to lose their jobs as a result of further cost cutting announced today." Also reporting results - Standard Chartered. Its shares fell four percent on Friday as the lender said it would not pay a dividend for 2016 due to restructuring costs. It did however increase its staff bonus pool by 5 percent. The bonus boost, which the bank said was needed to motivate and retain staff, came as the lender swung back to a pretax profit of $409 million for 2016. That's just a year after reporting its first loss in more than a quarter of a century.

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"Sins of the past" continue to haunt RBS

Friday, February 24, 2017 - 01:52