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RBS in "tailspin" as share price slumps
As the Royal bank of Scotland (RBS) announces its biggest loss since it was bailed out by the taxpayer, Saxo Bank's Peter Garnry explains he doesn't think the bank will be able to "patch things up".
RBS has reported a loss of GBP 8.2 billin for 2013. Its share price fell four percent when the FTSE 100 opened for business and later extended those losses beyond eight percent in mid-morning trade.
The lender, which is almost entirely government owned after being bailed out during the global financial crisis, has announced major restructuring. It is trying to revive earnings after GBP 46 billion of losses in six years by shrinking the investment bank, combining units and eliminating jobs.
But Peter reckons this will do anything but help RBS: "I think the new restructuring of the business will just make everything worse. If you cut 25 percent of your work force, it really makes horrible things to the whole organisation, and to the morale."
Speaking about the loss, RBS CEO Ross McEwan, said: "The potential for RBS is tangible, we have points of brilliance, but these are masked by a heavily damaged reputation, very high cost base and a structure that reflects the bank we are leaving behind, not the one we will become."
"Our future is not about us, it’s about our customers. These words greet our employees as they walk into our offices every day. They have come to represent a shorthand for what went wrong, but also what we need to get right".
01:50 minutes
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