RBS reports £2bn deficit in eighth year of loss as boss gives pay to charity

The results meant an eighth consecutive year of annual losses for the Edinburgh-based lender.

The deficit of of £1.98bn is partly due to £3.6bn for litigation costs, including £600m to cover claims over the mis-selling of payment protection insurance.

Last year RBS reported a loss of £3.5bn.

The bank also said it has set aside £2.9bn for restructuring.

Once these costs are stripped out, RBS recorded a £4.4bn underlying profit, down from £6bn a year earlier.

RBS said the fall in underlying profits was due to lower income from interest payments,

Chief executive Ross McEwan said: “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.”

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

The bank’s results also showed that Mr McEwan is to give half of a £1m ‘allowance’ to charity in an attempt to defuse what has become an annual pay row at the taxpayer-backed lender.

The money RBS pays out in bonuses to staff was reduced by 11 per cent to £373m for 2015, and Mr McEwan said he would not take the £1m “role-based” incentive, which is paid on top of salaries by some banks.

Mr McEwan also said that in 2016 he would give half of his role-based pay to charity.

It will be the third year in a row that the New Zealander will have voluntarily forfeited part of his pay package.

In addition to his basic salary of £1m, Mr McEwan received a pension contribution last year worth several hundred thousand pounds as well as a long-term share award vesting in several years’ time, although his total remuneration will again be substantially lower than his peers.

Institutional investors in RBS said they were keen for Mr McEwan to be paid “competitively”.

In August, the government sold a 5.4 per cent stake in RBS at 330p a share, raising £2.1bn.

The price was third below the 500p a share paid by the government when it took its £45bn stake in the bank during the financial crisis, and represented a loss of about £1.07bn.