The Royal Bank of Scotland posted Thursday a 2008 loss of 24.1 billion pounds -- the largest in British corporate history -- because of the credit crunch and the mis-timed takeover of ABN Amro.
The gigantic loss, equivalent to 34 billion dollars or 27 billion euros, means that last year the partly-nationalised bank wiped out all of its net profits from the preceding four years, AP reported.
The disastrous results for the embattled bank, now 70-percent owned by the state after a massive bailout in the wake of the global credit squeeze, contrasted with a net profit of 6.8 billion pounds in 2007.
The British government has meanwhile agreed to insure RBS "toxic" assets worth 325 billion pounds in its Asset Protection Scheme (APS) and will cover 90 percent of losses stemming from such holdings.
"What we're trying to do... is clean up the banking system so it does the job it's intended to do," British Prime Minister Gordon Brown told Sky News, adding that he wanted to get banks lending again.
RBS was hit particularly hard last year by its leading role in the record-breaking consortium purchase of Dutch giant ABN Amro in 2007 before the worldwide credit crunch ravaged the banking sector.
"We owe our continued independence to the UK government and taxpayers and are very thankful fOr their support," said RBS chairman Philip Hampton in a results statement.
"The external environment has seen unprecedented turbulence in bank and other financial markets and deteriorating economic conditions around the world.
"Our disappointing financial results reflect these circumstances and our exposure to them."
The bank said it will sell off and withdraw or reduce operations in 36 countries to re-focus activities on the domestic market.
In addition, the group will split into two parts, hiving off its riskier holdings into a "non-core" division of assets worth around 540 billion pounds that will be wound down over the next five years.
RBS, which has already taken 20 billion pounds of government funds, will raise another 13 billion pounds of state money in return for more shares.
The government's shareholding, in terms of votes, will be capped at 75 percent but RBS chief executive Stephen Hester said the state's economic interest in the group could rise as high as 95 percent -- bringing it close to full nationalisation.
The bank revealed it was forced to write off 16.2 billion pounds in 2008 on the disastrous acquisition of ABN Amro at the top of the market.
The huge annual loss followed a catastrophic year when the financial crisis, driven deeper by the failure of US investment bank Lehman Brothers in September, brought RBS to the brink of collapse.
The group will also pay 6.5 billion pounds to take part in the Asset Protection Scheme, aimed at stimulating bank lending in recession-hit Britain.
In return for its participation, RBS will commit to lend 25 billion pounds to British consumers and businesses this year and a similar amount in 2010.
In morning trade, the share price jumped by as much as 40 percent as investors cheered the results, which were better than a feared 28-billion-pound loss, and the toxic assets plan.
RBS later stood at 28.30 pence, up 24.22 percent.
Lloyds Banking Group, which is 43-percent state owned, said Thursday that it was in talks to take part in the scheme. LBG said it would update the market on Friday when it publishes its annual results.
It emerged Thursday that RBS' former chief executive Fred Goodwin, who is widely blamed for leading the bank into disaster, has begun drawing a pension worth 650,000 pounds a year despite being just 50 years old.
Hester, Goodwin's successor, announced plans to cut 2.5 billion pounds in costs across RBS by 2011 as he battles to restore the group to health, saying this would "regrettably" led to more job losses.
Reports have suggested that up to 20,000 jobs could go.
Most of the divisions and assets to be sold off will be in RBS' investment banking division. The bank will withdraw or radically reduce its operations in 36 of the 54 countries in which it operates.
British finance minister Alistair Darling defended the government's approach of providing backing for the toxic assets, saying: "What we're doing is recognising that the banks need to clean up their balance sheet."
Darling said Goodwin's pension was unacceptable and he had formally asked him to forego the 16-million-pound package.
Goodwin has also faced fierce criticism over the group's leading role in the record takeover of ABN Amro for 71 billion euros (100 billion dollars).The Royal Bank of Scotland posted Thursday a 2008 loss of 24.1 billion pounds -- the largest in British corporate history -- because of the credit crunch and the mis-timed takeover of ABN Amro.
The gigantic loss, equivalent to 34 billion dollars or 27 billion euros, means that last year the partly-nationalised bank wiped out all of its net profits from the preceding four years.
The disastrous results for the embattled bank, now 70-percent owned by the state after a massive bailout in the wake of the global credit squeeze, contrasted with a net profit of 6.8 billion pounds in 2007.
The British government has meanwhile agreed to insure RBS "toxic" assets worth 325 billion pounds in its Asset Protection Scheme (APS) and will cover 90 percent of losses stemming from such holdings.
"What we're trying to do... is clean up the banking system so it does the job it's intended to do," British Prime Minister Gordon Brown told Sky News, adding that he wanted to get banks lending again.
RBS was hit particularly hard last year by its leading role in the record-breaking consortium purchase of Dutch giant ABN Amro in 2007 before the worldwide credit crunch ravaged the banking sector.
"We owe our continued independence to the UK government and taxpayers and are very thankful fOr their support," said RBS chairman Philip Hampton in a results statement.
"The external environment has seen unprecedented turbulence in bank and other financial markets and deteriorating economic conditions around the world.
"Our disappointing financial results reflect these circumstances and our exposure to them."
The bank said it will sell off and withdraw or reduce operations in 36 countries to re-focus activities on the domestic market.
In addition, the group will split into two parts, hiving off its riskier holdings into a "non-core" division of assets worth around 540 billion pounds that will be wound down over the next five years.
RBS, which has already taken 20 billion pounds of government funds, will raise another 13 billion pounds of state money in return for more shares.
The government's shareholding, in terms of votes, will be capped at 75 percent but RBS chief executive Stephen Hester said the state's economic interest in the group could rise as high as 95 percent -- bringing it close to full nationalisation.
The bank revealed it was forced to write off 16.2 billion pounds in 2008 on the disastrous acquisition of ABN Amro at the top of the market.
The huge annual loss followed a catastrophic year when the financial crisis, driven deeper by the failure of US investment bank Lehman Brothers in September, brought RBS to the brink of collapse.
The group will also pay 6.5 billion pounds to take part in the Asset Protection Scheme, aimed at stimulating bank lending in recession-hit Britain.
In return for its participation, RBS will commit to lend 25 billion pounds to British consumers and businesses this year and a similar amount in 2010.
In morning trade, the share price jumped by as much as 40 percent as investors cheered the results, which were better than a feared 28-billion-pound loss, and the toxic assets plan.
RBS later stood at 28.30 pence, up 24.22 percent.
Lloyds Banking Group, which is 43-percent state owned, said Thursday that it was in talks to take part in the scheme. LBG said it would update the market on Friday when it publishes its annual results.
It emerged Thursday that RBS' former chief executive Fred Goodwin, who is widely blamed for leading the bank into disaster, has begun drawing a pension worth 650,000 pounds a year despite being just 50 years old.
Hester, Goodwin's successor, announced plans to cut 2.5 billion pounds in costs across RBS by 2011 as he battles to restore the group to health, saying this would "regrettably" led to more job losses.
Reports have suggested that up to 20,000 jobs could go.
Most of the divisions and assets to be sold off will be in RBS' investment banking division. The bank will withdraw or radically reduce its operations in 36 of the 54 countries in which it operates.
British finance minister Alistair Darling defended the government's approach of providing backing for the toxic assets, saying: "What we're doing is recognising that the banks need to clean up their balance sheet."
Darling said Goodwin's pension was unacceptable and he had formally asked him to forego the 16-million-pound package.
Goodwin has also faced fierce criticism over the group's leading role in the record takeover of ABN Amro for 71 billion euros (100 billion dollars).