Ouch! RBS posts a whopping £2bn loss. Here’s what caused it

The bailed-out bank is improving though

The Royal Bank of Scotland has reported a £1.98bn loss for 2015 – the eighth year in a row of losses.

It’s no surprise the bank is not in tip top financial shape. After being bailed out by the taxpayer during the recession, it’s battled through a number of other scandals – most notably the mis-selling of payment protection insurance (PPI).

It seems the bank spent £600m on compensation for the PPI scandal, part of the £3.6bn it spent on litigation costs last year.

It also set aside £2.9bn for restructuring.

With these costs removed, RBS, which is still 73% state-owned, made a £4.4bn underlying profit, down from £6bn in 2014.

However, costs in 2014 were also higher, meaning the end result was a loss of £3.5bn.

This means RBS is making progress on its recovery, but this progress would be sped up by an increase in interest rates, chief executive of RBS Ross McEwan said.

He told the BBC’s Today programme: “Low interest rates do hurt banks and its very clear interest rates will stay lower for much longer now.

“The UK and Republic of Ireland have quite strong economies… but you are seeing a slowing down in a number of economies around the world and low interest rates do hurt banks.”

He added: “We still have a lot of work to do in the cost base of the business.”

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