LONDON, Nov 30 (Reuters) - Royal Bank of Scotland has closed its so-called bad bank, which was set up to sell large chunks of its huge stockpile of unwanted assets, nine years after a 45-billion-pound ($60.58 billion) bailout by the British government.
The closure of its Capital Resolution division will mark a milestone on the bank’s road to recovery, with its balance sheet around 1.5 trillion pounds lighter than when its great sell-off began and a week after the British government said it planned to sell 3 billion pounds of public holdings of RBS shares in the next financial year.
The British lender announced the anticipated move in a memo to the 80 remaining staff in the unit on Thursday, closing the chapter on one of the biggest ever financial restructurings for what was once the biggest lender in the world.
“The closing of Capital Resolution is a key moment for RBS,” CEO Ross McEwan said.
“It has taken nearly 10 years to undo the consequences of the global ambitions pursued by RBS in the run-up to the crisis. What we have achieved is unprecedented for the banking industry. We have gone from a bank with a balance sheet bigger than UK GDP to the smaller, safer bank we are today.”
RBS, which is 71 percent-owned by British taxpayers, had a balance sheet of 2.2 trillion pounds in 2008 - almost double Britain’s annual economic output at the time - having staged a meteoric rise from being a small Scottish lender in the early 1990s.
The British government pumped 45.5 billion pounds into RBS in the depths of the financial crisis, and efforts since then to recoup the money have been stymied by the bank’s plunging share price, regulatory probes in the United States and Brexit.
RBS has reported losses of more than 58 billion pounds since 2008 but last month reported a forecast-beating operating profit in the third quarter that lifted its shares.
In 2008 the non-core unit employed 19,000 staff and RBS operated in over 50 countries. ($1 = 0.7428 pounds) (Editing by Adrian Croft)