RBS Posts £3.5bn Loss As Boss Hands Back £1m

A £4bn writedown on its US business meant Royal Bank of Scotland (LSE: RBS.L - news) (RBS) remained in the red in 2014, with the bank confirming a £3.5bn loss.

The annual loss marked the seventh consecutive year the part-nationalised bank has failed to achieve profitability, however the figure was a marked improvement on 2013 when it lost £9bn.

RBS said it would have made a profit but for the money it had written off at its US bank Citizens (NYSE: CIA - news) , which was built up over 25 years, through what it called a "fair value adjustment".

The bank also confirmed a Sky News story of Wednesday evening that chief executive Ross McEwan was giving up his £1m "role-based allowance" for 2015, which is intended as a top-up to his £1m basic salary.

He had already decided not to take a bonus for 2014 and RBS said it was reducing the size of its total bonus pool for the year by 16% to £483m.

Sir Howard Davies, currently leading the Airports Commission, is to be the bank's new chairman, replacing Sir Philip Hampton from September.

The bank said it had £2.2bn in litigation and conduct provisions during the year - money it set aside to cover the cost of previous misconduct.

It included additional provisions for the mis-selling of payment protection insurance (PPI) of £650m and provisions relating to investigations into the foreign exchange market of £720m.

The bank confirmed on Wednesday that it had suspended two further employees in connection with the currency-rigging investigation.

Operating profits were £3.5bn - the highest since 2010. - which RBS said reflected its restructuring efforts and renewed focus on the customer.

Mr McEwan said: "Our 2014 performance shows a strategy that is working. The strong execution against the targets we set now gives us a platform to go further and faster against this strategy.

“These results make clear that underneath the conduct, litigation and restructuring charges, we have strong performing customer businesses that are geared towards delivering sustainable returns for investors.

"What you see today is a bank that is on track and delivering on its plan; a bank that is able to deliver on its ambition to be number one for customer service and advocacy in the UK and Republic of Ireland (Other OTC: IRLD - news) ".

Unions expressed concern that further planned restructuring would hurt jobs.

Unite national officer Rob MacGregor said: "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.

"Today's announcement won't leave the wealthy traders devastated and worried about how they pay their mortgages. It will be the worker in the back office earning £20,000 per year who now faces uncertainty about what the future holds.

"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 restructured."

The Chancellor welcomed Sir Howard's appointment as chairman in a letter this morning, calling on him to ensure the bank's business was "conducted to the very highest ethical standards".

George Osborne 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."