LONDON – Royal Bank of Scotland Group PLC posted the biggest full-year loss since its bailout in 2008 as CEO Ross McEwan outlined plans to return what he called the industry’s least-trusted lender to profit.
The net loss widened to about 9 billion pounds ($15 billion) in 2013 from 6.1 billion pounds ($10.2 billion) in the year-earlier period as the lender logged more than 12 billion pounds ($20 billion) in charges for impairments, customer redress and legal costs. The pretax operating loss, at 8.2 billion pounds ($13.7 billion), missed the 5.28 billion-pound ($8.8 billion) estimate of 11 analysts surveyed by Bloomberg.
McEwan is trying to revive earnings after 46 billion pounds ($77 billion) of losses in six years by combining units, shrinking the investment bank and cutting jobs. More than five years after giving RBS the biggest bank bailout in history, the government still hasn’t been able to cut its 80 percent stake. The bank is also under political fire for awarding 576 million pounds ($961 million) of bonuses to staff, a debate McEwan called “emotional.”
“The key challenge for them is how to return to profitability to allow themselves then to normalize their ownership structure,” said Edward Bonham Carter, CEO of Jupiter Fund Management PLC, which oversees about 32 billion pounds ($52 billion). “The issue for them through their reorganization is how to reduce the size of the balance sheet, which they have started. They have to simplify their structure.”
The stock fell 7.7 percent to 326.6 pence ($5.45) in London trading, the most in more than 18 months. The shares still trade below the 407-pence price ($6.79) at which the government says it would break even on its holding. RBS is down 6 percent in the past year while Lloyds Banking Group PLC, the second-biggest government-owned lender, is up 52 percent.
“We are the least-trusted company in the least-trusted sector of the economy,” McEwan, 56, told reporters in London on Thursday. “That must change,” he said. “We need to be a smaller, simpler and smarter bank.”