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RBS reports £3.5bn loss as disposal costs and misselling provisions bite

RBS has reported a loss of £3.5bn in 2014 as costs associated with the disposal of its US bank Citizens and misselling provisions weighed on the firm.

The loss represents a significant improvement on 2013, when the bank haemorrhaged almost £9bn. This year’s figure includes a £4bn write-down in relation to the planned disposal of Citizens, which has listed on the New York Stock Exchange, £1.3bn of “restructuring charges”, and £2.2bn in litigation and conduct provisions.

Restructuring charges almost doubled year-on-year but conduct and litigation costs were down 43 per cent.

Conduct and litigation costs include £650m in provisions for PPI redress, £720m in provisions relating to the foreign exchange market, £185m in relation to interest rate hedging product redress, a £59m fine for an IT failure that occurred in 2012 and £580m of “other costs” including provisions relating to packaged accounts and investment products.

Operating expenses, excluding the impact of foreign exchange swings, have been slashed by £1.1bn, just exceeding the bank’s cost saving target of £1bn.

RBS says pre-tax operating profit for the year totalled £3.5bn, a huge swing from a £7.5bn loss in 2013.

RBS chief executive Ross McEwan says: “Last year we identified the areas we needed to improve in order to deliver our strategy – cost, complexity, capital and trust from our customers. The energy and resolve of our people have resulted in significant progress on each, and we have delivered on the goals we set for 2014.”

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