Royal Bank of Scotland reported its seventh annual net loss on Thursday and said it will exit some markets in the year ahead as the state-backed bank focuses on its operations in Britain.
For the twelve months of 2014 the company reported a net loss of £3.47 billion, significantly lower that the £9-billion loss it stated in the previous period. RBS said its results were dented by a write-down of £4 billion in relation to its U.S. operation Citizens and other charges linked to restructuring and litigation provisions.
RBS, which is 80% owned by the British government following its 2008 bailout, floated 29% of its Citizens business in September and is expected the unit to become deconsolidated from the lender by the end of the year.
Chief Executive Ross McEwan dropped his plan to create a global standalone investment bank and said RBS intends to fully exit from Central and Eastern Europe, the Middle East and Africa, while also significantly reducing its presence in Asia and the US.
However, Mr. McEwan did not disclose any exact numbers on how many employees will part ways with the bank due to the move, but said it would be “significant” figure.
Under its new plan RBS will stop operating in 25 out of its 38 markets by 2019 in order to redirects it efforts towards its core operations in the U.K. and Ireland.
RBS reported an operating profit of £3.5 billion, the highest figure the company has reached since 2010, compared to an operating loss of £7.5 billion in 2013. Mr. McEwan said the positive result reflected progress on RBSs cost reduction program, which offset a decline in overall income.
In a separate statement the lender said it has reached an agreement with Mizuho Bank, a unit of Japans second-largest financial services company, to sell a portfolio of U.S. and Canadian loans valued at $36.5 billion. The deal is expected to close before the end of June.
The companys plan “involves an acceleration of our strategy to build on our domestic strengths and a further reshaping of our corporate and institutional business as we seek to address its unacceptable returns,” said Mr. McEwan
RBS lost 0.15% on Wednesday and closed at GBX 403.30 in London. On Thursday the stock dropped 3.07% to GBX 392.40 at 10:23 GMT, marking a one-year increase of 10.74% The company is valued at £46.24 billion.
According to the Financial Times, the 25 analysts offering 12-month price targets for RBS have a median target of GBX 385.00, with a high estimate of GBX 530.00 and a low estimate of GBX 250.00. The median estimate represents a 4.54% decrease from the last closing price.
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