Bailed-out banks RBS & Lloyds to announce losses for 2011

Sunday, 19 February 2012 02:41

The two part-taxpayer owned banks, the Royal Bank of Scotland (RBS) and Lloyds Banking Group will announce their financial results for 2011 this week.

Nomura, an investment group states that RBS will turn a £239 million loss into a loss of around £2 billion in 2011 and Lloyds will slip back into losses of around £4 billion after making a £281 million profit the previous year.

The combined losses make it less likely that the combined bailout by the taxpayer at the height of the financial crisis of £66 billion will be repaid to the state coffers anytime soon.
RBS is 83 per cent owned by the UK taxpayer and required a bailout of £45 billion and Lloyds required a bailout of £21 billion.

RBS will have to defend its decision on bonuses, with £500 million worth of bonuses agreed by the government to be paid to senior bankers who work for RBS. Details of the bonus payments are likely to be released at the same time as the results on Thursday.

Lloyds will announce its results on Friday and has managed to avoid most of the negative headlines concerned with the remuneration of top staff as its chief executive Antonio Horta-Osorio declined to take any bonus this year because of a leave of absence in the final few months of 2011 caused by overwork.

Both RBS and Lloyds are going through huge structural changes designed to get them back into profit so that the UK taxpayer can recoup its losses and to make the banks more successful and to lessen the risk of either requiring another bailout in the future. Both businesses have had to shed thousands of jobs during the process so far.

RBS has cut its investment banking division from around 40,000 employees in 2008 to just 15,000 and Lloyds will cut 15,000 more jobs and is being forced to sell 632 of its branches. The branches are likely to be sold to the preferred bidder, the Co-operative Bank.

Both banks are valued at around 50 per cent lower than they were a year ago, which amounts to a theoretical loss of more than £30 billion for the UK taxpayer.

Lloyds shares are valued at 33p, nearly half the level that the government paid for its shares, 63p. RBS share price is now at 27.6 pence, less than half the level of 65 pence per share that the government would need to sell its shares at to recoup the bailout funds.

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