Hester: RBS loss is sign of our strength
RBS chief Stephen Hester yesterday said his bank exists in an “Alice in Wonderland world” in which the £2bn net loss it booked for 2011 is a sign of growing strength because it shows an ability to “take the costs of clean-up”.
The lender, which is 83 per cent government owned, also made a pre-tax loss of £2.6bn last year, after stripping out an accounting vagary that reduced the official number to £766m.
A string of impairments and one-off losses hit the bottom line, including a £1.1bn write-down on the value of RBS’s Greek bonds, £850m put aside to compensate customers who were mis-sold insurance and a £906m fee for membership of the asset protection scheme – a state insurance scheme the bank never actually had to use.
Hester said that further write-downs, which brought total impairment costs to £7.4bn, showed the bank was generating enough profits to sell at a loss or write down the toxic parts of its balance sheet without going bust.
Referring to the bank’s £45bn bailout, he said: “It wasn’t enough to pay for the clean-up – we have to do that ourselves from profits… We can only do one at the pace of the other.” He called those profits – £2bn in UK retail and £1.4bn in its corporate bank – “a budget for taking losses”.
The losses continue to include large hits to its Irish portfolio in Ulster Bank, where impairments rose to £1.4bn, up from £1.2bn in 2010.
Average pay per employee was down by over a quarter, while bonuses fell by 58 per cent.