The Royal Bank of Scotland has made an £8.2bn loss in 2013, as it struggled with the burden of regulatory fines and splitting up the business.
In a widely expected set of disappointing results, the bank reported its sixth annual loss since it was rescued by the UK government in 2008.
Of the £8bn loss, £3.8bn is attributed to regulatory and redress provisions, while £4.8bn is due to the establishment of RBS Capital Resolution.
RBS Capital Resolution is the internal 'bad bank' set up on 1 January to manage a pool of £29bn in high risk assets, aiming to speed up the run-down of these exposures and free up capital for the bank.
Meanwhile, operating profit fell 15% from the previous year to £2.5bn.
New chief executive Ross McEwan has outlined a raft of cost-cutting measure to revive the bank, reducing operating costs by 20%.His plan to transform the business includes cutting the cost base from £13.3bn in 2013 to £8bn, and trying to achieve a sustainable return on equity of 12% in the longer term.
The new business model will see seven of RBS' existing operating divisions realigned into three businesses: personal and business banking, commercial and private banking, and corporate and institutional banking.
The bank also set aside a bonus pool of £576m, a drop of 15% on last year, when £679m was paid out.
The group said in a statement: "The actions following our strategic review will start to drive cost reductions and improve efficiency during 2014. Whilst it will take two to three years to fully implement these, we expect our underlying cost base to be £1bn lower in 2014.
"We are working through our legacy conduct and litigation issues; the timings and amounts of any redress or settlements, however, remain uncertain. With the announcement of our strategic review, we expect elevated restructuring costs in the next two years."
McEwan added: "RBS needs a strategy that will address the weakness in our performance for customers, so that we can provide acceptable returns to our shareholders. The business review I have conducted has revealed our key challenges, but it has also given us a clear path to improve the bank."
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