By Margot Patrick
LONDON-- Royal Bank of Scotland Group PLC on Thursday said it
would exit around 10 countries this year and pull back sharply from
investment banking as its 2014 net loss narrowed and it edged
closer to shedding state support.
The 80% government-owned bank posted a GBP3.47 billion ($5.39
billion) net loss, narrower than 2013's GBP9 billion net loss.
Operating profit was GBP3.5 billion, against a GBP7.5 billion
operating loss in 2013.
Chief Executive Ross McEwan said the net loss was the result of
a series of one-off charges, including a GBP4 billion write-down on
the value of part-owned U.S. unit Citizens Financial Group and
GBP2.2 billion in conduct and litigation charges. He said the bank
is paying the price for its past ambitions to be a global
investment bank, and now needs to take more radical measures to
make RBS a sound investment for shareholders.
Mr. McEwan said the bank will "substantially reduce" its
presence in Asia and the U.S., and fully exit its markets
businesses in Central and Eastern Europe, the Middle East and
Africa. He declined to say how many jobs will go in the bank's U.S.
operation, which includes a vast trading floor in Stamford, Conn.,
but said "it will be a much smaller operation there."
"This is a plan for a smaller, more focused, but ultimately more
valuable bank with the vast majority of its assets in the U.K., and
for RBS marks the end of the stand-alone global investment bank
model," Mr. McEwan said.
Since requiring a series of government bailouts to survive
2008's financial crisis, RBS has drastically cut its size and
ambitions. It halved the number of countries it operates in, to
around 25, and aims to bring that total down to 15 or less. Last
year, it sold a 29% stake in Citizens in an initial public offering
and plans to fully exit the bank by the end of 2016.
The bank on Thursday announced its latest disposal, of a $36.5
billion loan portfolio to Mizuho Financial Group.
RBS shares were trading at 410 pence early Thursday, up around
1.7% on the day but still well below the roughly 455 pence price
needed for the government to break even on its investment.
The bank on Thursday named Howard Davies as its new chairman
from Sept. 1, replacing Philip Hampton.
Write to Margot Patrick at margot.patrick@wsj.com
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