(MENAFN- AFP) Royal Bank of Scotland will end investment banking in the Middle East and Africa and "significantly" reduce its presence in Asia and the US after a seventh-straight annual loss, the state-rescued lender said Thursday.
RBS, about 80-percent owned by the British government, said losses after tax totalled £3.47 billion ($5.40 billion, 4.74 billion euros) last year following a £4.0 billion writedown on Citizens, part of its US operations.
The performance was however much better than in 2013 when RBS had posted an annual net loss of almost £9.0 billion. Stripping out the writedown and other items, RBS recorded an operating profit of £3.5 billion for 2014.
Other one-off charges included £2.2 billion of conduct and litigation charges, including £320 million in the fourth quarter relating to the rigging of foreign exchange markets and £400 million of compensation for the mis-selling of an insurance product.
"While... progress is evident in the operating profit line of the results announced today, we are still posting an attributable loss to our shareholders," chief executive Ross McEwan said in the earnings statement.
"Now the deconsolidation of Citizens is finally within sight, accounting rules require us to write it down to its estimated disposal value," the New Zealander added.
RBS plans to sell all of Citizens after last year listing one-quarter of the US unit on the New York stock market.
McEwan meanwhile unveiled a major restructuring of its investment banking unit.
"We plan to fully exit our Markets businesses in Central and Eastern Europe, the Middle East and Africa, and substantially reduce our presence in Asia Pacific and the US."
He said the action would help to create "a smaller, more focused, but ultimately more valuable bank with the vast majority of its assets in the UK, and for RBS marks the end of the standalone global investment bank model".
In total , the bank's corporate and institutional unit, home to most of its investment banking activities, will slash its countries of operation to 13 from 38 at the end of 2014.
- Bonus restraint -
Edinburgh-based RBS confirmed that former British financial watchdog chief Howard Davies will be its chairman from September, replacing Philip Hampton who is joining British pharmaceutical giant GlaxoSmithKline.
Royal Bank of Scotland was rescued with £45.5 billion of public money in 2008 at the height of the global financial crisis, in the world's biggest bank bailout. And it has since reported losses totalling almost £50 billion.
Finance minister George Osborne, in a published letter to Davies, called on the new chairman to ensure the bank's business is "conducted to the very highest ethical standards".
He wrote: "Given the extraordinary support it has enjoyed in the past from taxpayers, I know you recognise that RBS must remain a backmarker on pay and continue to show responsibility and restraint."
The bank cut its annual bonus pool by 21 percent to £421 million and McEwan will give up £1.0 million as part of his entitlement.
Told by a BBC interviewer that many people would regard the total amount of bonuses allocated to RBS staff as "outrageous", McEwan replied: "And to be quite honest they are right. It's not something I am going to change or can change today but what I can do is focus on this business."
- Union pressure -
Unite, Britain's largest union, said it was seeking an urgent meeting with RBS for clarification over the bank's announcement regarding ''substantial restructuring'' in the investment banking division.
''Unite is deeply concerned that the announcement today by RBS of further restructuring will unfairly impact low paid and administration staff within the investment banking division," senior union official Rob MacGregor said in a statement.
''Already over 30,000 jobs have been cut from across RBS since the bailout in 2008. We now want a proper consultation period with Unite involving serious negotiations about how the business will be res
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.