Royal Bank of Scotland, parent of private banking groups RBS Coutts and Coutts & Co, said today that it suffered a net loss of £3.6 billion (around $5.52 billion), down from £24.3 billion a year before. The loss was narrower than the £5 billion figure that had been expected in various media reports prior to the results announcement.
The operating profit of RBS’ Wealth division – which includes its private banking arms – stood at £453 million in 2009, before impairment losses, up from £354 million in 2008.
Impairment losses at the Wealth arm were £33 million, up from £16 million.
The narrowing of the loss at RBS’s overall group comes at a time when the firm has been attempting to recover from massive losses incurred from the credit crunch. The bank is now part owned by the UK government. The taxpayer bailout of RBS – which happened alongside the rescue of Lloyds Banking Group, has made executive pay a hot political issue. Stephen Hester, RBS’s chief executive, will not receive an annual bonus for 2009.
RBS is heavily restructuring its business to repay bailout cash and reduce its risk exposure. To date, there has been suggestion that it intends to spin off its wealth management operations, still a profitable part of the group.
Net interest income at the Wealth business was £663 million, up from £578 million in 2008.
Private banking income stood at £916 million, up from £819 million a year ago.
The cost-income ratio of the Wealth division narrowed to 59.2 per cent in 2009 from 65.6 per cent in 2008.
Expenses were down 6 per cent, with staff costs decreasing by 11 per cent as a result of a planned headcount reduction.
At the end of 2009, RBS said its entire group had a Tier 1 bank capital ratio of 11 per cent.