The Royal Bank of Scotland (RBS) has announced it made a loss of £3.5 billion for the past year.
While it was an improvement on the £9 billion lost during the year before, it was a major cause for concern. RBS is 79 per cent-owned by the British taxpayer following the government's rescue plan in 2008 and was hit significantly by the sale of its US business. This transaction was subject to a £4 billion writedown.
Despite the poor performance, a number of high ranking RBS staff members will still receive a share of a £421 million bonus pot. The fund, 21 per cent smaller than in 2013, has come in for criticism with many arguing that RBS staff should not claim a bonus while the bank is still struggling at the taxpayers' expense.
Chancellor George Osborne has written a letter to the new RBS chairman, Howard Davies, stating that he expected the bank to withdraw bonuses to senior executives. RBS chief executive Ross McEwan has already confirmed that he would not be receiving a bonus this year.
The chancellor's letter stated: "I would also expect that, as in the past, no executive directors or members of the executive committee will receive bonuses, despite improved profitability.
"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."
Testing times for RBS
RBS has experienced some challenging times in the past 12 months. In October, the bank set aside £400 million to help cover the potential costs of an investigation into alleged manipulation of the foreign exchange market. It came when RBS seemed to be performing relatively well with pre-tax profits growing by £260 million to £1.27 billion.
Both RBS and Barclays stated they were putting money aside pending the outcome of the investigation.
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