Royal Bank of Scotland, Britain’s largest taxpayer-owned bank, has reported losses of nearly $9 billion for 2016, and admitted it will not return to profit until 2018, indicating that it will report 10 years of losses before it returns to the black.

Excluding conduct charges and restructuring costs – amounting to $12.5 billion of one-off items – the bank’s operating profit approximated $4.5 billion, which exceeded analyst expectations.

The ‘conduct charges included $7.4 billion in potential fines and legal costs - largely related to an upcoming penalty from the U.S. Department of Justice for selling toxic mortgage-backed securities in the run-up to the crisis.

“These costs are a stark reminder of what happens to a bank when things go wrong and you lose focus on the customer, as this bank did before the financial crisis,” said CEO Ross McEwan.

 

“This is a bank that has been on a remarkable journey. We still have further to go. But the next three years will not be the same as the past three,” he added.

McEwan set out plans to cut $5 billion of costs in the next 4 years - $900 million in 2017. Without providing details, he said there would be job cuts.

Ninety thousand jobs have gone since the bank was bailed out in 2008 as it pulled out of risky businesses and sold off huge parts of its the business to reduce the number of employees to 80,000. Five hundred forty branches have been shut since 2014 to take the network – which also includes NatWest – to about 1,200.

Two main items McEwan is trying to resolve are: (i) the settlement with the U.S. Department of Justice; and, (ii) the sale of 300 branches to meet state aid requirements imposed by Brussels.