£4.6bn accounting charge for RBS after “chastening” 2012

by Calum Fuller

More from this author

28 Feb 2013

  • Comments
Royal Bank of Scotland

THE ROYAL BANK OF SCOTLAND took an accounting charge of £4.6bn for changes in the value of its own credit in 2012.

The charge makes up the lion's share of £5.17bn loss it made to the year ending 31 December 2012 and relates to changes it made to its own credit, a measure how much it would cost to buy back its own liabilities.

Own-credit accounting allows banks to book profits even if they see the value of their own credit quality decline. In RBS's case its improved creditworthiness means it more likely to be able to pay its debts. Subsequently, it took a £4.6bn hit in its profit and loss to represent the debt serviceability.

In the bank's report, group chief executive Stephen Hester said the fee reflects a "huge improvement in the perceived credit quality of RBS".

RBS is 81% owned by the taxpayer after it was bailed out by the government during the financial crisis. It endured a turbulent 2012, and received a £390m fine for its part in the Libor rate-fixing scandal.

Hester added: "In a tough economic environment, most of the banking industry's ongoing businesses are running hard to stand still, and so it was at RBS [in 2012].

"But the existing level of operating performance is essential to fund our historic clean-up with the moment coming ever closer when these costs are behind us and rewards flow directly once more to shareholders."

Visitor comments

blog comments powered by Disqus
display:none

Add your comment

We won't publish your address


By submitting a comment you agree to abide by our Terms & Conditions

Your comment will be moderated before publication

Submit
  • Send

conservatoire-for-dance-and-drama

Finance-Director-part-time

Conservatoire for Dance and Drama, London, Permanent, Part Time, £60,000 pro rata

 

 

Newsletters

Get the latest financial news sent directly to your inbox

  • Best Practice
  • Business
  • Daily Newsletter
  • Essentials

Careers

Search for jobs
Click to search our database of all the latest accountancy roles

Create a profile
Click to set up your profile and let the best recruiters find you

Jobs by email
Sign up to receive regular updates with the latest roles suitable for you

Briefings

budget-management

Why budgeting fails: One management system is not enough

If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.

cchcover

iXBRL: Taking stock. Looking forward

In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.