Royal Bank of Scotland (RBS) has today announced the largest annual loss in British corporate history.
The troubled bank announced pre-tax losses of £40billion – a total loss of £24.1billion for 2008. RBS
was bailed out by the Government late last year as it became clear it would be unable to function alone. However, today's announcement from RBS also revealed that the taxpayer will be insuring £325billion of its toxic assets into a new Government scheme which will insure against future losses. Lloyds Banking Group
is also expected to participate in the scheme following its results announcement, which is due tomorrow.
Commenting on its losses, RBS group chief executive Stephen Hester said: "We are charting a path to standalone strength and with it the goal of justifying the support of the UK Government and all our shareholders.
"We are, of course, in a privileged position to be able to restructure the Group with support from the UK Government. With that privilege come responsibilities that we mean to fulfil.
"We have many difficult decisions ahead of us and continued and major uncertainties in our markets."
RBS is currently almost 70 per cent Government owned and this will be capped at 75 per cent, according to the BBC's Robert Peston who interviewed Stephen Hester on the Today Programme yesterday.
Further job losses are also expected at RBS as it intends to reduce its running costs by £2.5billion a year. Robert Peston said: "I put to him on the Today Programme
that this would lead to job losses around the world of more than 20,000.
"His non-denial was that job cuts would be substantial."
Meanwhile, as RBS announces the full extent of its dire straits, Robert Peston revealed that Sir Fred Goodwin, the bank's former chief executive, is already drawing a pension of £650,000 a year, at the age of 50.
Commenting, Peston said: "Perhaps unsurprisingly, when I informed the Treasury we were about to run this striking story, I was told that ministers were very unhappy about the generous terms of Sir Fred's early retirement package."
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