The RBS, which was rescued by the state last year, stated this week that losses closed narrowly when compared to last year coming in at about £1b as bad debts continued to add up although the Royal Bank of Scotland claims that it is starting to make a move towards positive recovery.
While a £1b loss may seem large, it is a large improvement over last year’s total net loss of approximately £3.6b. This is good news given the fact that the taxpayers now own about 83% of the RSB after the large bailout that came from taxpayers’ money.
The majority of last year’s losses came from the large £1bn charge that was made under the protection scheme provided by the government which was put in place to help banks protect themselves from suffering any losses as the result of high risk assets.
Even better news for the RBS, the operating profit of the banking giant increased moving into the profit zone with a total of £1.9b over the course of 2010 compared to the loss of £6.1b in 2009. On the other hand, bad debt losses took a turn for the worse diving down by a third to £9.3b including a £1.2 billion charge from the Ulster Bank in the last quarter of 2010.
Chief Executive of the RSB Stephen Hester stated that the RBS is now finally starting to turn over a new page towards recovery and are able to say that they are now finishing with operating profits instead of billions of dollars are loss. He added that the basic point is that while they are still suffering from some losses due to the money they owe the government they are beginning to move forward overall.