The share price of Royal Bank of Scotland (RBS) is down this morning (January 28th) after the bank revealed its full year losses could be as high as £8 billion.
A further £3.1 billion is being made available by RBS to cover claims relating to the financial crisis, leading to the difficult financial position the bank finds itself in.
Although shares fell by three per cent when the news was released by RBS, its share price quickly stabilised in the early stages of trading this morning.
RBS boss Ross McEwan explained that some problems are still emerging for the company because of bad decisions that were made during the global financial crash. The issues at RBS were so huge that the UK government was forced to bail the bank out and 80 per cent of RBS is still owned by the taxpayer.
Some £1.9 billion is being set aside by the bank to pay for fines and damages relating to mis-selling mortgage bonds in the US, along with other penalties relating to market manipulation.
RBS chairman Philip Hampton said: "RBS did suffer more than most banks in the crisis and these charges today represent an extra clearing-up of the mess that was created in the bank in the run-up to the financial crisis of 2008."
A further £4.5 billion of losses will be sustained as a result of bad loans and investments that have been made by RBS in the last few years.
Business secretary Vince Cable stated that it is "shocking" that the UK taxpayer is still having to cover the cost of the mismanagement at RBS during the global financial crisis.
Ian Gordon, from Investec Securities, added: "Some of this is a pull forward of future bad news and some of this is additional. Most of the items aren't surprising, but the amounts are at or above the top end of expectations."
RBS chief executive Mr McEwan told BBC News on Monday that most RBS executives will not be receiving a bonus for the last year as a result of the bank's financial position.
By 08:19 GMT this morning, stocks in RBS had recovered and were down just 0.66 per cent.
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