Royal Bank of Scotland Group, the British lender that is trying to return to health after nearly collapsing during the financial crisis, on Thursday posted a huge annual loss as it set aside more money for its legal woes.
The bank, based in Edinburgh, reported a 2013 net loss of 9 billion pounds, or about $15 billion â€" nearly 50 percent larger than the £6.1 billion loss it reported a year earlier.
The loss grew as the bank set aside £3.8 billion for possible legal bills and wrote down the value of assets by £4.8 billion.
“Even by recent standards, 2013 was a difficult year,†Ross McEwan, the bank’s chief executive, said in a statement. “Regulatory fines, wide-ranging customer complaints, technology problems and public questioning of our integrity all weighed heavily, and bring into sharp focus the job we have at hand.â€
The bank will continue its deep restructuring, and said it would cut £5.3 billion from costs over the medium term, partly by retrenching internationally to focus on its home markets in Britain.
The bank also said it had set aside £576 million for its 2013 bonus pool, down 15 percent from a year earlier, but still a figure with heavy political implications for an institution that remains in the hands of taxpayers.
The state holds 81 percent of R.B.S. shares, after British taxpayers bailed it out with £45 billion. Since 2009 the ailing lender has cut more than £1 trillion from its balance sheet. But the continuing hangover from the credit bubble and, above all, R.B.S.’s disastrous 2007 takeover of the Dutch bank ABN Amro, have left it looking perpetually in the rear-view mirror.
Year-end results at several European lenders, including Deutsche Bank, B.N.P. Paribas and Lloyds Banking Group, showed major provisions and charges for past sins, ranging from litigation charges related to the sale of securities tied to housing prices in the United States, to redress for improper sales of insurance products. Several lenders also have outlined aggressive plans to cut staff and reduce the size of their investment banking operations in order to shore up their capital base and limit their exposure to riskier investments.
R.B.S. has been rocked by accusations that it helped to rig benchmark interest rates and deliberately sought to saddle unsophisticated customers with expensive investment products. It has even been accused of deliberately driving customers out of business to pick up their assets at a discount. Just two weeks ago, Moody’s Investors Service put R.B.S.’s credit rating on review for a possible downgrade, citing its need to set aside provisions against legal claims.
The group’s businesses include NatWest, Ulster Bank, Citizens Financial Group in the United States and Direct Line Insurance. The bank said that it was planning to sell its remaining 28.2 percent stake in Direct Line. That divestiture, ordered by the European Commission because of competition concerns, could raise £1 billion or more, as Direct Line has a market value of just under £4 billion.
The bank’s plan to improve its capital ratio hinges on the sale or initial public offering of Citizens Financial later this year. R.B.S. said its fully loaded core Tier I capital ratio under the Basel III rules -â€" a measure of its ability to withstand financial shocks -â€" stood at 8.6 percent at the end of December, well below the level of many of its European peers. It said it aimed to raise that level to around 11 percent by the end of 2015 and to 12 percent or above by the end of 2016.
Chad Bray contributed reporting.
