The Royal Bank of Scotland yesterday reported a net loss of £24.1 billion (US$34 billion) last year, the largest annual shortfall ever recorded by a British company, and unveiled a massive restructuring program that will hive off many of its international businesses.
RBS, which is nearly 70 percent owned by the British government after a massive bailout, said it would sell off a large part of its assets, withdraw or reduce operations in 36 countries and refocus its activities on the domestic market.
Britain’s second-largest bank also said it will offload £325 billion of toxic assets into a government insurance program.
RBS’ huge annual net loss after minority interests and earnings from discontinued operations, compares with a £7.3 billion profit in 2007.
The pretax loss was significantly wider at £40.67 billion, compared with a £9.83 billion profit the previous year.
The bank’s revenue fell 15 percent to £25.87 billion.
RBS chairman Philip Hampton blamed the massive loss on the “unprecedented turbulence” in financial markets and deteriorating conditions around the world.
“We owe our continued independence to the UK government and taxpayers and we are very thankful for their support,” Hampton said.
RBS chief executive Stephen Hester — who replaced Fred Goodwin after he resigned in the wake of the bank’s financial downfall — said he was confident the restructuring and the government assistance would return RBS to “standalone strength.”
The bank said it planned to shift £240 billion, or 20 percent, of its funded assets to a non-core division. Those assets would then be disposed of or run down over the next three to five years. All assets kept in the core division will be subjected to five key tests.
The restructuring will leave the bank centered on Britain, with smaller, more focused global operations.
RBS’ participation with another £325 billion in the government’s asset protection program was widely anticipated, but analysts had expected it to seek guarantees for only about £200 billion in assets.
Under plans outlined by British Chancellor of the Exchequer Alistair Darling last month, the government will charge a fee to guarantee around 90 percent of a bank’s potential losses on assets, such as mortgage-backed securities and consumer loans.
The plan should increase the capital strength of banks by reducing the risky assets they hold, to support a return to lending.
Darling defended London’s renewed large-scale intervention to secure RBS’s survival yesterday.
“The costs are colossal, but the costs of not doing it are also colossal,” he said in a BBC interview, citing the failure of US investment bank Lehman Brothers as an example of the consequences of bank collapse.
He said the rescue plan for RBS came “close to full nationalization,” but stressed that the British government believed the “insurance model” to be preferable.
The government’s share of the bank could rise to 80 percent with the new measures announced yesterday.
RBS’ downfall in the wake of the global credit squeeze has been swift.
Just last July, The Banker magazine rated it as one of the world’s top banks based on its tier 1 capital.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique