Britain’s largest state-owned lender Royal Bank of Scotland (RBS) reported its eighth straight year of annual loss on Friday. The bank, hit by restructuring and litigation costs for past misconduct, reported a pretax loss of 1.98 billion pounds ($2.78 billion) — in line with a guidance released last month and a smaller figure than 2014, when it posted 3.47 billion pounds ($4.85 billion) in annual loss.
The bank’s restructuring costs reached 2.9 billion pounds ($4.06 billion) in 2015, while its conduct and litigation costs totaled 3.6 billion pounds ($5.04 billion). Pretax profit, excluding conduct and litigation charges and restructuring costs, fell over 27 percent to 4.41 billion pounds ($6.17 billion).
“Our pace of progress has resulted in a set of financials that are noisier than any of us would like, but it has resulted in a much stronger and simpler bank, with a much clearer investment case,” RBS CEO Ross McEwan said in a statement. “We are becoming much simpler, taking 983 million pounds of costs out of the business this year and over 2 billion pounds in the last two years.”
In January, RBS announced that it was setting aside 1.5 billion pounds ($2.15 billion) to cover litigation claims over sale of toxic mortgage securities in the United States and 500 million pounds ($716 million) to cover the wrongful sales of payment protection insurance — wherein millions of people were sold insurance they didn’t need. Additionally, the bank said it would write down the value of its private banking business by 498 million pounds ($713 million).
The troubled lender, which is 73 percent owned by the British government, also disclosed plans to make a one-off, lump-sum payment of 4.2 billion pounds ($6 billion) into its pension scheme due to changes in its accounting policy and to cover an accounting deficit.
The latest results hinder the government’s plan to privatize RBS — a process it began last August by selling a 5.4 percent stake in RBS at 330 pence a share, which raised 2.1 billion pounds ($2.94 billion). The price was below the 500 pence a share paid by the government when it took its stake in the bank during the financial crisis.
The bank's shares dropped 10 percent at the open in London — its biggest intraday decline since June 2012 — before recovering slightly to trade down 7.75 percent.