RBS logs £6B loss for scandal-hit 2012

Posted date: March 01, 2013 In: Business

LONDON (AFP) – State-rescued Royal Bank of Scotland said Thursday that net losses ballooned to almost £6.0 billion in 2012, hit by compensation payouts, Libor rate-rigging fines and a vast accounting charge.

Losses after taxation widened to £5.97 billion ($9.05 billion, 6.89 billion euros) last year, compared with a shortfall of £1.997 billion in 2011, RBS revealed in a statement. It marked the bank’s fifth successive annual net loss.

RBS took a huge accounting charge of £4.649 billion against the improving value of the group’s own debt. That contrasted with a credit of £1.914 billion in 2011.

And the Edinburgh-based lender also set aside another £450 million to cover compensation for mis-selling payment protection insurance, and £650 million for clients mis-sold interest rate hedging products.

RBS had already revealed earlier this month that it would pay fines totalling $612 million (453 million euros) to US and British regulators to settle allegations of Libor interest rate rigging.

Part-nationalised RBS added on Thursday that underlying operating profit excluding exceptional charges almost doubled to £3.462 billion, aided by deep cost-cutting and falling impairment charges.

And the group noted that its five-year restructuring plan would be mostly complete by the end of 2013, predicting it would therefore become a “cleaner” and better performing bank in 2014.

“RBS is four years into its recovery plan and good progress has been made. We are a much smaller, more focused and stronger bank. Our target is for 2013 to be the last big year of restructuring,” said RBS chief executive Stephen Hester.

He added: “2012 saw landmark achievements for RBS. It was also a chastening year.

“Along with the rest of the banking industry we faced significant reputational challenges as we worked with regulators to put right past mistakes.

“We are determined to overcome the cultural and reputational baggage of pre-crisis times with the same focus we have applied to the financial clean-up from that era.”