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RBS Announces £2 Billion Loss for 2015

RBS Announces £2 Billion Loss for 2015

Royal Bank of Scotland (RBS) announced a £1.98billion loss for 2015 on Friday, the bank’s eighth straight year of reporting an annual loss. After the financial crisis in 2008 the bank was on the brink of collapse,  relying on the government purchasing an 84 per cent stake to save it. A large proportion of the bank’s losses are being caused by costs related to litigation both domestic and US based. The total litigation costs amount to as much as £3.5billion with £2.1billion of this figure relating to US mortgage bond litigation. However, as well as large litigation costs causing the loss figure, the bank’s underlying profit fell from £6billion to £4.4billion, with CEO Ross McEwan placing the blame for this drop on the low interest rates and the effect that this has on interest payments.

On the announcement of the news RBS’s shares fell to a three year low with the shares coming in at £2.22 per share, less than half the figure that the government paid for the shares back in 2008 when the shares were priced at £5.02 per share. In August of 2015 the Chancellor George Osborne sold a 5.4 per cent stake in RBS which managed to raise £2.1 billion. In January Mr Osborne had planned to sell off the government’s final 10 per cent stake in Lloyds, however the market turmoil that accompanied the turn of the year forced the delay in the selloff. In light of the news and the effect that it has had on RBS’s share price that any selloff will occur any time soon.

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