Royal Bank of Scotland (RBS) has announced the largest annual loss in UK corporate history.
RBS, which had to be bailed out by the government last year, said that its 2008 loss totalled £24.1bn (£34.2bn). It also said it would put £325bn of toxic assets into a scheme that offers insurance for any future losses.
The Asset Protection Scheme, backed by taxpayers, aims to strengthen bank balance sheets and encourage banks to lend more to firms and individuals.
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 are very thankful for their support,” he said.
He warned that 2009 would be another tough year.
The bulk of the losses came as RBS made a £16.2bn write-down on poorly performing assets, mainly resulting from its 2007 takeover of ABN Amro at the height of the boom.
It said underlying losses totalled £7.9bn.
Well, I’m glad we cleared that up — the underlying loss was only £7.9 billion. Meanwhile, Sir Fred Goodwin who shepherded the organization until November has retired at 50 with a pension of £650,000 annually.
Sir Fred Goodwin, the former chief executive of Royal Bank of Scotland who was widely blamed for the bank’s demise, has begun drawing a pension of £650,000 a year, at the age of 50, prompting a Treasury investigation.
The pot from which Sir Fred draws his pension is worth £16 million.
UK Financial Investments (UKFI), the government body created to oversee its stakes in the banks, said it was “vigorously pursuing with the new [RBS] chairman whether there is any scope for clawing back some or all of this pension entitlement, and whether the board took the decision in the full knowledge of the facts.
“This is another example of the culture of rewards for failure that we are determined to sweep away for the future,” UKFI said in a statement.
Corporate trivia: which company previously held the record for the largest corporate loss in British history?
Vodafone: £21.9 billion.