RBS posts £2bn loss as restructuring and litigation costs balloon

RBS has confirmed it made a £1.98bn loss for 2015, down from a £3.47bn loss the previous year

The FTSE 100 bank, which warned investors in January it would make a loss, said litigation and conduct costs increased 62% to £3.57bn.

That included £2.1bn of additional provisions for mortgage backed securities litigation in the US and an extra £600m of provisions relating to PPI.

Restructuring costs ballooned 154% to £2.93bn as the bank's repositioning accelerated, particularly as it reorganised the Corporate & Institutional Banking business which cost £524m.

Capital Resolution restructuring costs were also much higher, totalling £1.3bn as the business continued its planned rundown.

The group’s total operating expenses came in at £16.4bn, up from £13.9bn the previous year.

However, it shaved 10% off its annual adjusted operating expenses bill, which excluded restructuring costs, litigation and conduct costs and a £498m write down of goodwill, from £10.4bn to £9.4bn.

A reduced staff headcount in Corporate & Institutional Banking and Capital Resolution contributed to a 9% drop in staff costs to £4.9bn.

The bank also reported risk-weighted assets were reduced 32% by £113bn, including £109bn from the disposal of Citizens Financial Group and the accelerated run-down of Capital Resolution.

Chief executive Ross McEwan said RBS ended the year a simpler and stronger bank with a business anchored squarely in the UK and Ireland and focused on retail and commercial markets.

“Year one of our plan in 2014 was about getting cost out and improving our capital position,” he said.

“This gave us the platform to go further, faster in 2015 by exiting more businesses that didn't fit our strategy, and accelerating improvements in our core bank. We delivered on both.”

McEwan said the Government's decision to start disposing of its majority stake in RBS last year was a significant step forward, and underlined the progress made over the last two years.