It’s been a decade now since the Royal Bank of Scotland (RBS) has made any annual profit. Today, it posted a loss of 6.96 billion pounds ($8.74 billion) for 2016. It had posted a figure of 1.98 billion pound loss for 2015. This resulted in the bank cutting the potential share award of CEO Ross McEwan by about 40 percent this year.
In 2016, he received 2.87 million pounds, which will now come down to 1.75 million pounds at the most in deferred shares. This is because he missed his yearly targets on many fronts, including long-term incentive program, employee engagement, shareholder returns, and customer trust.
In 2015, there were 101 employees who earned at least $1.1 million, but in 2016 this figure came down to 87 employees.
Sandy Crombie, the board’s pay chief said in a statement, “While RBS continues to report losses it is vital that the bank remains disciplined in its approach to remuneration. On the other hand, we need to fairly reward our colleagues who work with customers from day to day and who bear no responsibility for the decisions which led to those losses, and it is important we attract and retain well-qualified and motivated people.”
RBS is currently in the middle of enormous multi-year restructuring, juggling between asset sales, job cuts, and trying to sail through a series of legal scandals. McEwan addressing reporters through the conference call blamed the past sins for the continuous bad performance of the bank. RBS had received a bailout of 45.5 billion-pound during the financial crisis and is still a majority owned by the government. The shares of the bank dropped by 2% on the London exchange after the results were announced.
The bank is hopeful that 2017 would probably be the last year of posting losses after which it will start rising from the darkest era in the 290 years long history of the bank. In the last 9 years, the bank has racked up losses of 58 billion pounds in total.
This Edinburgh-based lender now has plans of cost cuttings of around 2 billion pounds in the next four years. This is planned to cope up with low-interest rate economy that is posing a challenge for the bank to make money. The areas, where this cost cutting will impact, is not yet specified, but it is speculated that the branch network will take the maximum hit. This is because most of the customers now prefer online banking rather than going to the branches.