Royal Bank of Scotland makes a loss for ninth straight year

Posted February 25, 2017

RBS reported an attributable loss to shareholders of GBP6.96 billion for 2016, more than treble the GBP1.98 billion attributable loss it booked in 2015.

The Edinburgh-based lender said it had been hit by litigation and conduct costs of nearly £5.9bn, largely over its role in the 2008 USA subprime housing crisis.

Chief executive Ross McEwan said: "The bottom-line loss we have reported today is, of course, disappointing but, given the scale of the legacy issues we worked through in 2016, it should not come as a surprise".

The US Department of Justice is pursuing the bank over the sale of mortgage-backed securities prior to the 2008 financial crisis.

Looking ahead, RBS plans to reduce adjusted operating expenses in the order of 2 billion pounds in the next four years with around two thirds of this from the core bank.

Meanwhile, Standard Chartered boss Bill Winters has also embarked on a major restructuring of the emerging markets-focused lender.

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Tangible net asset value per share fell to 296 pence from 338p.

RBS is in now implementing a multi-year restructuring which includes asset sales, job cuts and legal actions.

This was in line with analyst expectations of a GBP3.46 billion operating loss, excluding a GBP750.0 million provision taken for the restructuring of the bank's Williams & Glyn branches. Deutsche Bank AG upgraded shares of Royal Bank of Scotland Group plc to a hold rating and raised their price target for the stock from GBX 172 ($2.14) to GBX 220 ($2.74) in a report on Wednesday, February 8th.

The bank also paid the Treasury £1.2bn previous year to settle a condition of its state bail-out, clearing the path for restarting dividend repayments at some point in the future. The British Government has said it will not resume selling its stake in the beleaguered bank until it settle its fines with the U.S. and resolves its state aid demands with the EU.

The British government now owns 73% of the bank, which is still dealing with the fallout of the financial crisis.

Aside from the banks, 2016 results from troubled educational publisher Pearson PLC (LON:PSON) will also be a focus on Friday, although the firm already provided its headline numbers and 2017 guidance in a trading update in January.