The Royal Bank of Scotland, parent of RBS Citizens Bank Connecticut, lost $34.4 billion – the most in British corporate history – and unveiled a massive restructuring today that will offload many of its international businesses.
The already part-nationalized bank also said it will dump billions of dollars of toxic assets into a British government insurance program, a step that could result in Britain increasing its stake to as high as 95 percent.
RBS Chairman Philip Hampton blamed the massive 2008 loss on the “unprecedented turbulence” in financial markets and deteriorating conditions around the world.
RBS’ financial downfall has stirred anger in Britain, prompting the resignations of former Chief Executive Officer Fred Goodwin and Chairman Tom McKillop.
New RBS Chief Executive Stephen Hester refused to make forecasts for the current “difficult” year but said he was confident the restructuring and the government assistance would return RBS to “standalone strength.”
Hester said the designated “bad” assets would be culled from a range of regions and businesses, but the bulk would come from the bank’s underperforming Global Banking and Markets division.
The restructuring, which includes plans to cut more than 2.5 billion pounds from the bank’s cost base, will leave the bank centered on Britain, with smaller, more focused global operations.
Hester declined to comment in detail on potential job losses but acknowledged reports of the bank shedding 20,000 positions, or 10 percent of its work force, were “not unreasonable.”
At 11 a.m., RBS traded at $8.04, up $1.45, or 22 percent. (AP)
