According to the chief executive officer of one beleaguered personal and business bank account provider, it has taken around £38 billion in charges so far to clean up the bank – with more costs looming on the horizon, banking experts added.
Stephen Hester, chief executive for RBS, said that around £28 billion in costs originate from losses related to personal and business loans which took a turn for the worse, while an additional £1 billion was lost on bad securities investments. Around £5 billion of the remaining costs were for one-off items, according to Mr Hester, such as the £2.9 billion spent to restructure the bank and cover sovereign debt losses, and the nearly £1 billion in costs incurred by mis-selling payment protection insurance, with the rest business write-offs caused by the credit crunch in 2007.
Among these final charges, data analysis for the last three years to the end of September of 2011 indicates that UK retail banking impairments, which mainly originated from credit card and mortgage losses, came to a sum of £3.5 billion. Meanwhile, bad business loans in the UK corporate sector resulted in £2.1 billion in losses.
Other losses, such as the £2.7 billion linked to Ulster Bank, a financial services provider owned by RBS, and the £1.4 billion lost in the US retail and commercial banking sectors, rounded out the total figure. However, the chief executive said that more details would be revealed in around two weeks when RBS is scheduled to make its full-year results public.