RBS faces £8bn loss for 2013
The bank surprised the market last night with an unscheduled statement, admitting it will require extra provisions on top of the £4bn-£4.5bn loss it will make from the separation of the ‘bad bank’ part of the business.
With the addition of these provisions the state-backed bank is set to make a total loss of around £8bn for the year to 31 December 2013.
Following the statement, which was made just before the market closed on Monday, the bank’s shares fell 2.5%. Shares subsequently rose 0.8% in early trading on Tuesday to 335p apiece.
The £3.1bn in provisions will be divided between the costs of litigations related to mortgage-backed securities in the US, payment protection insurance mis-selling, mis-selling of interest rate swaps to SMEs and other legal expenses.
As a result, chief executive Ross McEwan and eight members of his executive team will forfeit a bonus for this year, with McEwan also giving up his 2014 bonus.
The bank is also set to see a significant fall in capital levels as a result of these losses.