This morning I was listening to 5Live, and Robert Peston came onto to discuss the latest figures from Royal Bank of Scotland. RBS was writing down up to £8bn for 2008. Peston also said that this meant that RBS had written off about £47bn in total. He said the same thing on the Today programme.
Forty seven billion pounds is a staggering amount of money. It is about $70 bn. It is about 2.5% of the whole of the UK GDP in 2007 (about $2,770 bn).
Here are the annual profit figures for RBS:
|£m||Profit before tax||Tax||Profit
Source: Annual reports from RBS
So RBS has effectively written off more than all the profit after tax since 1994: it hasn’t made any money for fourteen years.
True it isn’t “real” money – these are accounting adjustments: but profits aren’t necessarily real either. Different years may not be completely comparable – RBS made a lot of acquisitions in Europe and America, most notable NatWest in 2000 and – an acquisition too far – ABN Amro in 2007.
In that time, of course, RBS has paid a lot of money in tax. As any profitable enterprise should.
There are a couple of reasons I chose 1994 as the year to go back to in the accounts. It was one of the first I could get hold of (in the five year summary from the 1997 accounts – I could have gone back to 1992, but it wouldn’t have made a great deal of difference). But perhaps more importantly for me, 1994 was when I became an employee of RBS. (I left three years ago, I’m pleased to say.)
Back in 2001, after the acquisition of NatWest, the department I worked in held a big meeting as part of its process to integrate staff from RBS and NatWest. In the evening, there was a party: the theme of the party was a casino. Everyone was given a handful of chips with a notional “value” to play on a variety of tables – roulette, black jack, that kind of thing.
It now seems rather ironic.