The annual report of Royal Bank of Scotland (RBS) stayed under the market expectations due to the restructuring plans, including the sale of assets. The analysts had expected a loss before tax to reach 8 billion GBP for 2013. The forecast, however, remained below the published level of 8.24 billion GBP. For 2012 RBS reported loss before tax of 5.16 billion GBP.
RBS also announced a new strategic direction in order to build a solid consumer confidence in the bank. The financial institution experienced hard last year due to the global financial crisis. RBS was rescued by British authorities with large financial aid.
The bank announced that it will focus on the UK market and will restructure its units to the needs of the customers. The internal reform will include increase of the proportion of the UK assets to 80%, as the current value is approximately 60%. The Royal Bank of Scotland also described in detail the plans for the sale of its business unit in USA, which is expected to be completely abandoned till the end of 2016.
About 81% from the RBS shares are hold by the British government, but according to the new CEO Ross McEwan one of the bank’s main objectives is to gradually reduce the level of the state participation, heading to the private sector. According to experts, such a development may include the need for heavy cuts of about 11 000 jobs. However, McEwan said that currently the bank does not expect such optimization.
The capital adequacy of the basic tier of RBS reached 8.6% at the end of 2013, while an earlier was at level of 8.1%. This forced the credit rating agency Moody’s to warn of a possible downgrade of the institution’s credit rating.
From RBS also pointed out that the ratio of expected cost to income is expected to reach 55% till 2017 and 50% till 2020. The current level of this ratio is 73%.
Immediately after the publication of the financial report of RBS in the early trading on the London Stock Exchange the capitalization of RBS took down sharply. The shares of the bank were traded at 337.50 GBP with a daily decline of 4.66%.