RBS chief Hester says worst is behind bank

By Harry Wilson, Financial Services Correspondent Published: 1:56PM GMT twenty-five February 2010

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Royal Bank Of Scotland Group

"Weve past the riskiest piece for the bank," pronounced Mr Hester. "This is not to contend there arent formidable times ahead, but so far so good."

Speaking on Thursday morning, Mr Hester pronounced 2009 was a year of "substantial progress" for the bank as he highlighted how RBS was forward of report on his targets for branch the lender around.

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Reporting a not as big than foresee loss of �3.6bn for last year, RBS, that slumped to a jot down �24.3bn loss in 2008, pronounced it approaching to have an additional loss this year and would not spin a distinction prior to 2011 as it enters the second year of a five-year plan written to lapse the bank to the in isolation sector.

Mr Hester spoke as he was forced to urge the argumentative �1.3bn in reward payments RBS is scheming to compensate to the 16,800 staff in the investment promissory note division. Mr Hester, who at the week end waived his own desert to a �1.6m bonus, pronounced RBS had to travel a "difficult tightrope" as he fit the payout of �1.3bn in bonuses to the 16,800 staff operative in the bank"s investment promissory note division, where normal benefit in 2009 were about �150,000.

Despite these large payouts, Mr Hester cited maintaining staff as his greatest complaint for the subsequent twelve months and pronounced the bank was still approaching to see a large outflow of employees, that he described as "damaging, but not destructive."

Pay at RBS, that is 84pc owned by the UK supervision following a multi-billion bruise taxpayer bailout, and alternative vital British banks has turn an annoying issue for Prime Minister Gordon Brown and Chancellor Alastair Darling, however Mr Hester insisted the preference on bonuses had been done wholly by the bank"s board, following capitulation by UK Financial Investments, that had the right to halt any payments.

Analysts had been awaiting a �5bn loss. Much of the disproportion was accounted for by a �2bn one-off benefit done by the bank on the curtailment of staff grant entitlements, as well as a improved than approaching opening in the last 3 months of last year.

A point of regard for Mr Hester and the RBS government organisation will be the complicated faith on the tellurian markets and promissory note business. Its GMB multiplication accounted for about a third of sum organisation revenues of �31.7bn, but some-more than half of the firm"s increase prior to impairments.

The business, that is home to RBS"s investment bankers and houses all the bank"s trade operations, had a really clever year on the behind of rarely enlightened marketplace conditions, however most equity analysts are notice that this turn of profitability is doubtful to tolerable in the longer-term.

Lending to UK businesses strike �60bn in 2009, whilst the bank gained marketplace share in the debt marketplace creation �20bn of new loans as most competitors withdrew from the market. However, �50bn of genius for new loans to UK businesses stays untapped and Hester pronounced most corporate commercial operation were preferring to compensate down debt rather than take on more.

Another vital issue for RBS is the stability sale processes of multiform businesses. JP Morgan is set to buy large tools of the bank"s line corner try RBS Sempra, whilst the Global Merchant Servicing commercial operation is additionally on the block. RBS Insurace, that had been up for sale, is right away approaching to stay as the bank attempts to turnaround the business"s performance.