EDINBURGH (Reuters) - Royal Bank of Scotland’s (RBS.L) Chief Executive Stephen Hester said on Tuesday it would take another 18 months to improve the bank’s capital position enough to keep regulators happy.
“Our capital ratios are transformed but we have another 18 months or so to get them in the final shape that we and our regulators want,” Hester told shareholders at the bank’s annual meeting in Edinburgh, Scotland.
Britain’s financial regulator said in March that UK banks must raise 25 billion pounds of extra capital by the end of the year to absorb any future losses on loans. Although the regulator has not yet given specific guidance to individual banks, analysts expect the biggest shortfall to be at RBS.
RBS’s Core Tier 1 ratio, a measure of its financial strength, stood at 8.2 percent at the end of the first quarter, assuming the full implementation of tougher global rules, which are being phased in, lower than most major European banks.
Hester has overseen a major restructuring of the bank, which has shed around 900 billion pounds of assets from its bloated balance sheet since Britain rescued it with a 45.5 billion pounds ($69.8 billion) taxpayer-funded bailout in 2008. This left the government with an 81 percent stake.
Chairman Philip Hampton said that the bank should “substantially complete” its restructuring in 2014, enabling it to return to the private sector “as soon as we can.”
“We have the ambition of putting the government in a position to sell the shares towards the end of 2014. Then it is the government’s decision,” Hampton told reporters.
Hampton said there would be more job cuts at the bank, which had previously said it would cut 3,800 jobs from its markets and international banking division by the end of 2013.
Hampton also said the bank would invest an additional 450 million pounds to improve its computer systems, on top of the 2 billion pounds it spends each year. The bank suffered a major embarrassment last year when systems failures left millions of customers unable to make or receive payments.
($1 = 0.6517 British pounds)
Editing by Kirstin Ridley and Jane Merriman