Royal Bank of Scotland thought to face £4bn hit following Citizens flotation

RBS branch sign

Royal Bank of Scotland is thought to be facing a £4bn hit as a result of the partial flotation of its US arm last year.

The 79% taxpayer-owned bank may need to take the knock after floating Citizens as part of its efforts to retrench its domestic market.

There are expectations that when it publishes its annual results next Friday RBS will writedown the value of Citizens, which was created over a 25-year period of acquisitions.

A writedown on that scale could hold back attempts by the bank to return to profitability after posting £2.6bn in profits for the first half of the year. Those were its highest first-half profits since the onset of the 2008 financial crisis.

Accounts for RBS show it had calculated £4.3bn of goodwill for Citizens, to reflect that the business was worth less than the bank spent building it. RBS floated off 29% of the US business in September in what was the largest deal of its kind.

The major banks are preparing to report their results for 2014. The focus is likely to be on bonuses and concerns about the conduct of the industry, reawakened by the revelations that HSBC’s Swiss arm was helping clients avoid tax eight years ago.

HSBC will be the first bank to report its results on Monday, when it will face questions about its Swiss arm and publish details about staff pay, including Stuart Gulliver, the chief executive, who has received around £8m each year since he took the top job in 2011.

The two bailed-out banks, Lloyds Banking Group and Royal Bank of Scotland, report their results at the end of the week. Lloyds may confirm that its boss António Horta-Osório stands to receive more than £7m from a three-year pay deal which could push his total to £10m. Seven other members of his management team could also be in line to share £20m if all the performance criteria are met in full.

Powered by article was written by Jill Treanor, for on Friday 20th February 2015 18.00 Europe/ © Guardian News and Media Limited 2010


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