RBS posts ninth straight annual loss on "sins of the past"; StanChart shares fall as it withholds dividend but lifts bonuses

Record ID: 899249

  • Title: RBS posts ninth straight annual loss on "sins of the past"; StanChart shares fall as it withholds dividend but lifts bonuses
  • Date: 24th February 2017
  • Summary: LONDON, ENGLAND, UK (FILE) (REUTERS) VARIOUS OF EXTERIOR OF STANDARD CHARTERED OFFICE
  • Embargoed: 10th March 2017 11:25
  • Keywords: Standard Chartered Bank Britain UK results RBS
  • Location: LONDON, ENGLAND, UK
  • City: LONDON, ENGLAND, UK
  • Country: United Kingdom
  • Topics: Company News Markets,Economic Events
  • Reuters ID: LVA00564VPXFX
  • Aspect Ratio: 16:9
  • Story Text: Royal Bank of Scotland reported a sharp rise in losses on Friday (February 24) as higher misconduct charges and restructuring costs underscored the challenges facing the lender nine years after it was bailed out in the world's biggest bank rescue.
    RBS, which has not made an annual profit since 2007, booked 6.96 billion pounds ($8.74 billion) of losses for 2016, against a 1.98 billion pound loss in the same period a year earlier.
    Once, albeit briefly, the world's largest bank by assets, RBS is in the midst of a vast, multi-year restructuring which includes asset sales, job cuts and wading through a series of legal scandals.
    "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," Chief Executive Ross McEwan said.
    RBS said 2017 will probably be the final year it makes a loss as it moves nearer to closing the darkest chapter in its 290-year history, which has seen it rack up more than 58 billion pounds in losses so far.
    The Edinburgh-based lender also announced plans to cut 2 billion pounds of costs over the next four years to help offset the challenge of a low interest rate economy that makes it harder for the bank to make money.
    Although RBS did not specify where the cuts would fall they are expected to partly hit its branch network where the lender has already eliminated thousands of roles as more customers bank online.
    "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," Independent Market Analyst, Jeremy Batstone-Carr told Reuters.
    Total income was moderately down, with the jump in losses mainly driven by a 5.9 billion charge of misconduct issues relating to its behaviour in the run up to the 2007-2009 global financial crisis.
    RBS took charges to set aside money to cover legal cases in the U.S. where analysts expect it to pay the biggest regulatory penalty in its history for mis-selling U.S. securities backed by toxic mortgage loans.
    Analysts have estimated the bank could have to pay the U.S. Department of Justice as much as 9 billion pounds this year.
    RBS was the only British lender to fail the Bank of England's stress test in 2016, a sign of how the bank's future is still being dictated by its past.
    In some rare good news for RBS, the British government is pushing to free the bank from an obligation to sell its Williams & Glyn business to try to end a seven-year struggle to meet European Union state aid demands.
    In other banking news, Standard Chartered shares fell four percent on Friday as the British lender said it would not pay a dividend for 2016 due to restructuring costs, but increased its staff bonus pool by 5 percent.
    The bonus boost, which Chief Executive Bill Winters said was needed to motivate and retain staff, came as the lender swung back to a pretax profit of $409 million for 2016, a year after reporting its first loss in more than a quarter of a century.
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