RBS faces £8bn loss as it sets aside money for new claims
Taxpayer-backed Royal Bank of Scotland could make losses of £8bn as it prepares to increase its compensation pot to £3.1bn to cover the cost of litigation and customer claims.
The sum includes £1.9 billion to cover mainly US action over mortgage-backed financial products, and £500m to compensate the victims of mis-selling of complex financial products to small firms, known as interest rate swaps.
An additional £465 million will cover a redress scheme for customers mis-sold payment protection insurance, while £200 million will be set aside “for various conduct related and legal expenses” when fourth quarter results are published next month, said the bank, which is 80 per cent taxpayer owned.
RBS Chief Executive Ross McEwan said the scale of “bad decisions” taken by the bank during the financial crisis “are still just emerging”.
He added: “At the peak of the financial crisis, RBS was the biggest bank in the world. When the crisis broke the bank was involved in a number of different businesses in multiple countries that have subsequently faced heavy scrutiny by customers and regulators.
RBS also said its executive committee of eight senior employees would not receive bonuses for their performances in 2013. Mr McEwan has already said he would not take a bonus for 2013 or 2014.