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RBS clean-up charges total £38bn

Stephen Hester has said that his battle to turn around the beleaguered bank would involve even more cost

Stephen Hester said his battle to turn around RBS had so far cost around £38bn in clean-up charges – and there would be more to come. The bank provided a sketchy breakdown of how Hester reached that total.

Some £28bn comes from losses incurred on loans which have turned sour. Another £1bn is from losses on securities investments. Of the remainder, some £5bn is one-off items – such as the near-£1bn provision for mis-sold payment protection insurance, and £2.9bn of restructuring charges and other losses on sovereign debt. The rest is losses on businesses that Hester no longer wanted to keep, some of which are credit writedowns caused by the 2007 credit crunch.

Within those impairment charges, an analysis of data for 2009, 2010 and up to the end of September 2011 – the most recent available – shows that the impairments inside UK retail (mainly mortgages and credit card losses) stood at £3.5bn, while in UK corporates (bad business loans) they stood at £2.1bn. Losses linked to RBS’s ownership of Ulster Bank total £2.7bn. In US commercial and retail banking, the losses reached £1.4bn.

In the non-core division businesses being readied for sale, the banking and portfolios arm incurred £17bn of bad debt charges, with another £1bn spread across the division. Hester said he would reveal more details in a fortnight when the bank is due to publish its full-year results. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds