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Royal Bank of Scotland, which this week was promised another £33.5 billion of taxpayers' money, today revealed it lost a further £1.5 billion in the past three months.
That was £2 billion less than the loss seen in the second quarter but chief executive Stephen Hester admitted it will still “take years” to restore the bank, which is about to be 84% owned by the taxpayer, to full financial strength.
“These results show precisely why RBS is worth rescuing,” he said. “During the quarter every single one of our businesses was either stable or grew its customer base. But we are under no illusions, we made a loss and profitability needs to get better. Bad debt appears to have plateaued but they are still at a very high level.”
He added: “Economic recovery is likely to be slow and the pain of economic adjustment will take years to subside. Our business will reflect these issues.”
Earlier this week RBS signed up to a new Government-backed asset protection scheme and agreed to sell large parts of the business to comply with European state aid rules. This will see the total taxpayer bailout of the bank rise to £53.5 billion.
Hester said: “While not all we wanted, we now have the tools to do the job. We can see some important early signs of a base being built from which we can return to profitability.
“Bad debts have fallen for the first time since the financial crisis began, the erosion of our profit margin has stabilised and there was good growth in customer deposits.” Bad debts for the latest quarter were £3.3 billion, 30% down on the previous three months. Ulster Bank and Citizens in the US are still seeing bad debts rising. Hester said it was likely bad debts would remain high for several quarters to come.
He also said RBS had suffered from the uncertainty over its future and the new tight Government rules on paying bonuses. “It has led to damaging losses of good people right across the bank, not just in investment banking. It has been damaging but not destructive.”
So far this year RBS's operating loss has climbed to £4.88 billion compared with the £2.16 billion profit it made in the first nine months of 2008.
Investment bank operating profits slumped from £1.5 billion in the second quarter to £375 million in the third as world financial markets returned to more normal trading patterns.
RBS shares rose 0.4p at 35.6p
Reader views (5)
The bonuses will continue albeit paid in a more 'creative' fashion.The net result will be a virtually unchanged total compensation figure for the rip-off merchants at the Investment Banking arm yet very little for the long suffering retail divsion.But how many other businesses in the real world would pay its staff if it was basically itself insolvent?Net net the taxpayer is paying!scarey eh
- Anon, london, 06/11/2009 16:33
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Don't worry RBS, I'm sure myself and selected taxpayers will be forced to chip in to bail you out.
- Nobby Clark, Perth, the Scottish one, 06/11/2009 16:21
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Take the money back from RBS failed chairman and all the others who milked it why should we taxpayers keep bailing these failed Scot firms out?
Nice comment by Dave Davies
- Mike, London England and once GREAT Britain, 06/11/2009 15:59
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I assume there will be no bonuses for any RBS employees until the group is back in profits?
- Colin Macpherson, Gramat France, 06/11/2009 12:55
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I am glad Gordon Brown abolished boom and bust, else these losses would run and run and run ....
- Dave Davies, Basingstoke, Hants, 06/11/2009 11:22
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